We are still exercising fiscal discipline, Kosit insists
Deputy Prime Minister and Industry Minister Kosit Panpiemras has insisted that the government is still exercising fiscal discipline, despite the wider budget deficit for the 2008 fiscal year.
"The government's lower-than-expected revenue collection is in line with economic conditions. A lower inflation rate reduces revenue collection, while the adjustment to the excise tax structure for the telecom industry has also eaten into government revenue. However, the disappearing revenue is not huge," Kosit said yesterday. The minister said the new deficit target of Bt165 billion remained within fiscal discipline. He added that a wider deficit was necessary, as the government needs to be more active in spending when the private sector is inactive. The new 2008 budget will be submitted for Cabinet approval on Tuesday. Finance Minister Chalongphob Sussangkarn said on Tuesday that government revenue for the year could be Bt20 billion lower than expected, while expenses should increase by Bt25 billion. The government budget will then be expanded from Bt1.63 trillion to Bt1.66 trillion, with a deficit of Bt165 billion from the previous target of Bt120 billion. The government plans to run a larger deficit for the next fiscal year as revenue is expected to miss the target, and the government will also increase spending to boost growth, he said. There will be a deficit of Bt165 billion, up from the Bt120 billion estimated earlier, said Chalongphob. Previously the government projected expenditures at Bt1.635 trillion for the 2008 fiscal year and revenue at Bt1.515 trillion. Chalongphob said the government would increase spending by Bt25 billion while the previous revenue target would be missed by Bt20 billion, resulting in a deficit of Bt165 billion. The finance minister said the government wanted to boost economic growth, and therefore had to run a larger deficit. However, he did not reveal which new projects would be implemented, saying that the Cabinet would decide budget allocations. The economic slowdown has adversely affected government revenue for both the current and next fiscal years. The government has chosen to loosen fiscal policy, as it wants to stimulate growth. The Bank of Thailand has reduced its policy rate, as inflationary pressure has subsided.
Witchit Chaitrong The Nation
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