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Published on July 16, 2007

Somchai Jitsuchon, economic adviser to Finance Minister Chalongphob Sussangkarn, said public debt was found to be higher than official figures after the government's off-budget spending was counted. Somchai and his colleagues will present their study of fiscal transparency today at a seminar held by the Finance Ministry.

The study is expected to be used as a platform to create a fiscal warning system because Chalongphob wanted to create a more transparent system through which anyone could monitor the health of the country's fiscal position.

The official public debt is around 37 per cent of gross domestic product. He did not reveal the new figures discovered by his research team.

The current system does not reflect the true fiscal burden because it does not fully integrate off-budget spending into the fiscal framework. Off-budget spending is funds the government is obliged to contribute but the procedure does not include scrutiny by Parliament.

One of the large off-budget spending items is the government matching fund which has an obligation to contribute to the Social Security Fund along with employers and employees. Its investment portfolios are worth Bt427.24 billion.

Somchai said the government contributed about Bt80 billion to the fund each year. However, the administrative cost of the Social Security Fund is very high - about 10 per cent or Bt8 billion - he said. The total budgets of the Social Security Office were Bt21.58 billion for the fiscal year 2008 and Bt21.17 billion for the current fiscal year.

Somchai noted that this budget is higher than the budget for the Ministry of Social Development and Human Security which has a budget of Bt8.63 billion for the current fiscal year and expects to receive Bt9.07 billion for the next fiscal year.

Somchai also questioned the innovative method used by the Treasury Department to finance the government complex. The department has set up Dhanarak Asset Development Co, a real-estate firm, for raising funds via securitised bonds worth Bt20 billion, or bonds backed by future rental income from the complex.

The Finance Ministry does not count this securitised bond as public debt issued by Dharanak Asset Development Co. Somchai, however, said part of it should be counted to make it more transparent.

Somchai said the interim government may not be able to create an effective fiscal monitoring system but it would lay the groundwork for the next government.

Wichit Chaitrong

The Nation