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Published on October 16, 2007

 The government ran a cash-flow deficit of Bt158.73 billion in fiscal 2007 ended on September 30 and the Fiscal Policy Office has warned that more fiscal burdens are in store if the National Legislative As-sembly fails to approve amendments to the Currency Act.

The cash-flow deficit comprised a budget deficit of Bt129.97 billion and an off-budget deficit of Bt28.76 billion. Off-budget spending is that booked outside the fiscal budget plan.

The government earlier predicted a deficit in planned budget spending of Bt146.2 billion in the 2007 fiscal year. It borrowed Bt146.2 billion and made use of fiscal reserves of Bt12.53 billion to finance the cash-flow deficit, Finance Ministry spokesman Somchai Sujjapongse said yesterday.

The cash-flow balance indicates how much money the government borrows and digs into fiscal reserves to finance spending deficits.

In the 2007 fiscal year, government revenue rose 7.9 per cent to Bt1.45 trillion, compared with actual spending of Bt1.57 trillion, close to planned expenditure of Bt1.5662 trillion. Actual spending comprised expenditure of Bt1.47 trillion in the 2007 fiscal year and carried-over expenditure from the previous fiscal year of Bt104.13 billion.

However, Fiscal Policy Office director-general Pannee Sathavarodom warned that the fiscal burden would increase if the NLA failed to approve amendments to the Currency Act.

It may take longer than the earlier-scheduled 29 years to write off debts of Bt1.4 trillion incurred by the Financial Institutions Development Fund when bailing out banks during the 1997 financial crisis, she said.

According to the existing plan, the Finance Ministry will pay interest on the debts, while the Bank of Thailand will repay the principal. However, the central bank is running a book loss from its currency market intervention to support the baht over the past few years, Pannee said.

The draft amendments to the Currency Act are designed to allow the central bank greater flexibility to reinvest its financial assets globally and change the way it records its financial statements, which must currently show that it makes profits.

The amendments have been delayed because critics strongly opposed them. They are concerned the changes will allow the central bank to make mistakes in managing reserves.

Wichit Chaitrong

 The Nation