Subsidies extended for three more months

The Cabinet yesterday agreed to keep the five cost-of-living mitigation measures going for three more months, as well as giving the green light for recurring borrowing of Bt35 billion for this fiscal year.

The five measures, extended three times already, were set to expire at year-end.

Finance Minister Korn Chatikavanij said the policy would cost the government Bt22 billion in subsidies to the state enterprises asked to support the government's measures to help lower income people.

Of the total, Bt5 billion was incurred during the Samak administration, Bt11 billion funded the July-December extensions and Bt6 billion will be allocated for the last extension until March. The measures are:

- Waiving water charges for households with monthly consumption below 20 cubic metres

- Waiving electricity charges for households consuming no more than 90 units a month

- Running free city bus services benefiting 430,000 passengers

- Operating free economy-class trains both short and long haul

- Maintaining the lid on the retail price of cooking gas

The Finance Ministry had proposed to extend the measures for six months, but the prime minister and Deputy Prime Minister Korbsak Sabhavasu believed the government should reduce their period and magnitude, to signal that they are temporary.

"The measures were first born in economic hard times, and the government should reduce the scale," Prime Minister Abhisit Vejjajiva said.

Korbsak also said the measures should be curtailed as they consume about Bt20 billion of the annual government budget.

However, Ampon Kittiampon, secretary-general of the National Economic and Social Development Board, cautioned that if the measures were trimmed back or aborted, it may push up inflation.

Transport Minister Sophon Saram also backed continuing the measures for water and electricity bills to help the poor.

Of the total new debt for this fiscal year, Bt10 billion or 28.1 per cent is earmarked for construction and school building improvement projects, while Bt6.3 billion is for road construction and improvement.

As of September, the end of the 2009 fiscal year, the government's recurring debts totalled Bt447.49 billion.

The Cabinet also approved the strategy for allocating the 2011 budget along nine themes - national confidence, government stability, social development and narrowing the social gap, economic stability, natural resources management to cope with climate change, scientific improvement, international affairs and good governance.

The government's fiscal deficit reached 4 per cent of gross domestic product in the fiscal year ended in September, said Satit Rungkasiri, head of the Fiscal Policy Office.

Central and local governments ran a combined fiscal deficit of Bt349.73 billion, compared with a surplus of Bt18 million in the year before, he said.

The fiscal 2009 deficit was the result of the government's efforts to prop up the economy, which had taken a beating from the global financial crisis and domestic political uncertainty. The private sector had also remained weak. The deficit was calculated using government finance |statistics.

Public sector revenue had fallen 5.6 per cent to Bt2.18 trillion, while government expenditures had risen 9.7 per cent to Bt2.53 trillion in the last fiscal year.