Govt accused of deception

Pheu Thai MP Surapong Tovichakchaikul said he did not see the reason for urgent borrowing under an executive decree to authorise the government to go a further Bt400 billion in debt.

The opposition has succeeded in forcing the government to allow live television coverage of the deliberation of the executive decree, which is part of the government's plan to borrow Bt800 billion to finance its Bt1.43-trillion public investment plan for 2009-2012.

The other Bt400-billion borrowing package is being introduced as a bill. The proceeds from this bill will go mainly to paying government overhead such as salaries for civil servants, as the government is experiencing financial distress from dwindling tax collections.

Surapong said budget disbursement had reached only 60 per cent of the Bt1.8-trillion target for the current fiscal year ending in September. As some 40 per cent has not yet been used up, the government need not borrow on an emergency basis, he said.

The government lied to the Constitution Court and Parliament about its borrowing plan, he said.

"The government claimed it wants to finance the budget deficit of Bt200 billion, but actually, the government will need only Bt110 billion," he added.

He blamed the lack of details on the projects and unreliable investment figures released by the Public Debt Management Office of the Finance Ministry for deceiving the public.

The ministry has told the charter court that the government will invest Bt289.7 billion this year and next year, but the latest figure was only Bt240 billion, he said.

The government should have cut the military's budget to make up for the revenue shortfall, he said.

The government is defying fiscal prudence by issuing an executive degree instead of seeking alternative solutions, Surapong said.

The government's plan to borrow from commercial banks by issuing promissory notes worth Bt170 billion this year was a way to seek 'tea money' from the banks, he said.

Several opposition lawmakers took the opportunity to criticise the government's first economic stimulus package, which has already been implemented.

They claimed the cash handout of Bt2,000 to those making less than Bt15,000 per month had helped the rich rather than poor farmers.

Others condemned the government for failing to raise the prices of farm goods.

Finance Minister Korn Chatikavanij cited the severe economic downturn as a key reason for expanding borrowing.

The government needs to inject about Bt400 billion to Bt500 billion into the economy each year over the next few years to compensate for losses caused by the global financial crisis and local political turmoil, he said.

Though the government plans to run a fiscal deficit for a few years, it does not have adequate funds for new public investment.

The government intends to launch about 6,000 projects worth Bt1.43 trillion between 2009-2012, under the so-called second economic stimulus package, he said.

The development plan ranges from mass transit, double-track railroads, roads, irrigation and other infrastructure to social welfare, education and tourism.

Since public spending would overshoot revenue by an estimated Bt280 billion this year, the government would need to borrow from the market.

However, the current Budget Act restricts borrowing to no more than 20 per cent of annual expenditures, while the Public Debt Management Act imposes a ceiling of 80 per cent of principal repayment.

So the government needs to issue |an executive decree to raise Bt400 billion and a bill to raise Bt400 billion, he added.

Parliament will today discuss the bill to raise Bt400 billion from the onshore market.