Local governments received only 24.1 per cent in the last fiscal year, even though the Fiscal Decentralisation Act obliges the national government to contribute 35 per cent.

"They have been neglected for a long time, so we have to consider this in the next meeting on Monday," said Pridiyathorn.

Some officials have proposed that local revenues should be included in the 35 per cent target, while central government should contribute only the balance.

Somchai Sajjapongse, a deputy directorgeneral of the Fiscal Policy Office, said earlier that the government could meet the target with some accounting methods.

Local governments may receive the budget in terms of public health services. Some projects, such as CEO provincial governors or Small Medium and Large (SML) village projects, may be considered as part of the budget. Moreover, local governments may be allowed to raise construction tax, he said.

However, there are concerns that local authorities could not handle the budget efficiently as administrative decentralisation has not become fully functional. As a result, budget distribution could be wasteful.

Pridiyathorn said the 35 per cent target would not affect the country's investment budget.

Government revenues for the 2007 fiscal year are expected to be Bt1.42 trillion, Bt20 billion higher than forecast. The relevant agencies have not yet concluded how much the budget deficit will be, he said.

Pridiyathorn said the deficit could decline or be in line with the planned level. State agencies will propose a deficit for Cabinet approval on Tuesday. It was reported earlier that the deficit would be Bt100 billion.

The deputy prime minister said the government was likely to meet the target for 2007 revenues due to the efficiency of tax collection. He insisted that higher income would be derived from several departments of state agencies and not by any increase in tax rates.

He declined to disclose a figure for economic growth next year used as an assumption for the revenue forecast. He said earlier that the economy was expected to grow five per cent next year.

Meanwhile, the government recorded an actual budget deficit of Bt55.19 billion in fiscal year 2006, which ended on September 30, compared with a balanced budget of Bt1.36 trillion planned for the year, the Ministry of Finance said Wednesday.

The government disbursed Bt1.394 trillion, while net revenue totalled Bt1.339 trillion, ministry spokesman Somchai Sujjapongse told a news conference.

"The budget deficit in fiscal year 2006 was due chiefly to spending rolled over from previous fiscal years," Somchai said.

Of the total disbursement, Bt1.270 trillion was for planned expenditure and the remaining Bt124.54 billion was from rolledover allocations from the budgets of earlier fiscal years, he said.

Despite the budget deficit, the government recorded a surplus of Bt42.24 billion in its cash balance due to the issuance of treasury bills and deposits of state funds set up for special purposes that remained unused, Somchai said.

Anoma Srisukkasem

The Nation