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Published on January 11, 2008

If the incoming government deems it necessary, it could adjust the 2008 budget to cover higher spending, Vudhibhandhu said on the sidelines of the Organisation for Economic Cooperation and Development (OECD) Asian Senior Budget Officials' Meeting in Bangkok. "There is no problem if the new government wants to run a larger budget deficit," he said.

The interim government has allocated a budget of Bt1.66 trillion for the current fiscal year, which started in October.

It has projected revenues of Bt1.495 trillion, resulting in a budget deficit equivalent to 1.84 per cent of gross domestic product (GDP).

All political parties promised to give voters better social welfare and other benefits during the December election campaign. Some wanted to increase government spending by Bt80 billion for this fiscal year.

Finance Ministry officials have indicated that the deficit could rise to 3 per cent of GDP.

Experts from the OECD and senior officials from Asian countries yesterday discussed several issues related to budgeting development.

Delivering the keynote speech to the meeting, Thirapat Serirangsan, Prime Minister's Office minister, said that with growing demand for public services, the government had to provide high quality and more costly public services and infrastructure than in the past.

He said he believed that the new government would base its policies on the sufficiency-economy principle.

"Sufficiency economy was conceptualised by His Majesty the King. It is a philosophy that stresses the middle path as a principle for appropriate conduct by people at all levels, Thirapat said.

Barry Anderson, head of the OECD's budgeting and public expenditure division, suggested that governments should value fiscal sustainability. "Deficits should be zero," he said.

In terms of fiscal sustainability in Thailand, Anderson said: "It is not bad."

Naci Agbal, general director of Turkey's Budget Bureau, said his country had run a fiscal deficit of 14 per cent of GDP in 2002 when an economic crisis hit the country. But it has now been cut to about 2.5 per cent.

Other participants said many countries would run a larger fiscal deficit this year in order to boost their economies and to cushion the world economic slowdown caused by the sub-prime loan crisis in the United States.

Wichit Chaitrong

 The Nation