Kittiratt under fire on decrees

Ousted Thirachai mounts fresh Facebook attack on finance minister

Deputy Premier and Finance Minister Kittiratt Na-Ranong faces new criticism for the haste in which the four borrowing executive decrees are being issued. Critics - including the former finance minister - point out the government could issue a law and subsequently subject the flood-related investment projects to parliamentary screening, which is not required of executive decrees.

In the third post on his Facebook page after being dismissed from the Yingluck government, former Finance Minister Thirachai Phuvanatnaranubala said Kittiratt backed up his decision on the debt move with incorrect figures. Last Friday, he attacked the government for a proposal involving dilution of state ownership in PTT Plc, which forced Kittiratt to delay the move. That was followed by a post on the government's attempts to understate public debt, which Thirachai called an act against fiscal discipline.

Kittiratt proposed the four executive decrees to the Cabinet on January 4. Six days later, he stressed it was necessary the executive decrees be issued, instead of royal decrees, given the urgency regarding the government’s debt repayment ability. At present, for reasons of fiscal discipline, the government was liable to keep the annual debt repayment (principal and interest) at 15 per cent of expenditure or lower.

Thirachai said Kittiratt told the Cabinet the repayment level at the time was 12 per cent. As such, the Financial Institutions Development Fund (FIDF)’s debt needed to be moved out of the government's account to free the government from its interest burden. Such a burden, estimated at Bt45-Bt65 billion annually depending on interest rates, would limit the government’s ability to borrow more.

"I learnt later that he got this information (the repayment level) from the NESDB (National Economic and Social Development Board), based on its own economic projections. I also used the same figures in my interviews. Yet, a day before I was dismissed, I was informed by a Finance Ministry officer about the Public Debt Management Office’s figure. In the 2012 fiscal year, the level is only 9.33 per cent (7.36 per cent as interest payment and 1.97 as principal repayment). This was based on the official projection as presented to Parliament.

"(Based on the low level), this completely overrides the urgency in issuing the executive decrees," he said.

As the NESDB reports to the deputy prime minister on economic affairs, while the Public Debt Management Office is under the Finance Ministry, Thirachai urged Kittiratt - who is now the direct supervisor - to compare the discrepancy and look into the data collection and calculation.

Observers believe Thirachai was dismissed because of his conflicting opinions, chiefly on the government's solutions to tackle the FIDF debt. Originally, Kittiratt wanted outright transfer to the central bank and pondered government control of the central bank's assets - which include the near US$200 billion foreign reserves.

Some senators earlier urged the government to issue a law, to allow parliamentary screening of investment projects. Executive decrees need no parliamentary screening. One of the executive decrees commanded the transfer of the FIDF's Bt1.14 trillion debt to the Bank of Thailand, and another would allow the government’s borrowing of Bt350 billion to finance flood-related investment.

Yesterday, while vetting the 2012 budget bill, the Senate also expressed concern over the Bt400 billion central budget as well as the executive decree to borrow another Bt350 billion. The central budget normally contains no details of spending. Fearing corruption, they urged the government to closely monitor the flood rehabilitation spending in the short and long term.

In her address, Prime Minister Yingluck Shinawatra assured the Senate that the budget would be spent efficiently and transparently, with two focuses - rehabilitating the economy and preventing another disaster. She insisted the government needed to resort to a new budgeting approach this year, in the aftermath of the disastrous floods.

The expenditure this year is fixed at Bt2.38 trillion.