The government plans to increase spending by Bt25 billion from the original plan, Finance Minister Chalongphob Sussangkarn said after the Cabinet meeting yesterday.

Of the additional spending, Bt17 billion would support the new salary structure for state officials, he said. The Cabinet yesterday approved a 4-per-cent pay raise for state employees starting this October, the first month of fiscal 2008. The government will spend more than Bt5 billion on social projects known as "well-being" or "U-dee Kin-dee" projects, in addition to the previous plan of Bt10 billion.

The other Bt3 billion would support community development under the guidelines of the sufficiency economy philosophy.

The "well-being" project was initiated by Social Development and Human Security Minister Paiboon Wattanasiritham.

After taking into account additional spending, government expenditures for fiscal 2008 would be Bt1.66 trillion, up from Bt1.635 trillion previously planned.

Meanwhile, government revenue has been revised down to Bt1.495 trillion, from 1.515 trillion previously estimated, due to the economic slowdown. The country would thus run a budget deficit of Bt165 billion in the fiscal year, up from Bt120 billion projected earlier.

Chalongphob said the salary increase for state employees would boost economic growth.

Research houses have predicted growth this year would be about 4 per cent or lower due to sharp slowdowns in consumption and private investment.

The government has given home-owners a tax deduction of Bt100,000, up from Bt50,000, on their interest payments for mortgage loans. However, critics have said the economic package is too small. Some have urged the government to cut corporate and personal income tax rates while others have made the case for a budget deficit of up to Bt200 billion.

Wichit Chaitrong

The Nation