8-year goal to balance the budget

The Fiscal Policy Office (FPO) plans for a balanced budget in the next 7-8 years, after running a deficit for almost 20 years, its chief says.

The target is based on assumptions that the government reforms both revenue and expenditure, and state investment is set at exceeding 20% of annual budget expenditure, Krisada Chinavicharana, directorgeneral of the FPO, said.

Since 1998, there have been only three fiscal years when budgets did not require borrowing to fund deficits. Previously, the Finance Ministry targeted to balance the budget by 2017, but it has given up the goal, citing liabilities for hefty spending on infrastructure development and losses from the Yingluck Shinawatra regime’s ricepledging schemes.

To reform expenditure, higher joint investment by the private sector in profitable projects and better control of regular expenses from the upsurge must be carried out, he said.

The government is considering allowing insurance companies to take over the provision of healthcare coverage to state officials and families as part of its effort to control expenses after medical bills rose to 68 billion baht this fiscal year.

Living allowances for senior citizens is another area the Finance Ministry is eyeing to save expenses, Mr Krisada said. The living allowance costs the government 70 billion baht a year, he said, after the previous government offered higher living allowance, increasing costs by 20-30 billion a year. Such budget allocation is permanent, he said.

The Yingluck administration decided to pay a monthly 600 baht people aged 60-69, 700 baht to those aged 70-79, 800 baht to those aged 80-89, and 1,000 baht to those 90 and older, to fulfil her 2011 campaign pledges.

The FPO has estimated the burden will grow to 90 billion baht a year by 2024, when Thailand is due to have an ageing population.

Populist policies can be implemented, but a cap on the budget is needed, he said.

To reform revenue, income can be raised through higher economic growth and efficient improvements to tax collection, he said. An array of measures, including e-tax, a single financial account scheme for small and medium-sized enterprises, and new taxes can help raise the government’s income stream, he added.