Fiscal 2030 for balanced budget start

Thailand is forecast to achieve a balanced budget in fiscal 2030, based on GDP growth of more than 4% a year.

The Monetary and Fiscal Policy Committee, chaired by Prime Minister Prayut Chan-o-cha, agreed yesterday on the government’s balanced budget target.

According to Finance Minister Apisak Tantivorawong, the Monetary and Fiscal Policy Committee, chaired by Gen Prayut, agreed that if interest and principal are excluded, a balanced budget can be achieved in fiscal 2026.

Mr Apisak said a balanced budget may be reached before 2030 if the government’s tax reforms are successful and the government collects greater revenue.

The government has run budget deficits since fiscal 1999, except for in 2005 and 2006.

The Finance Ministry is eager to curb the deficit to strengthen the fiscal position as a cushion for any economic crisis that could erupt. But the government’s hefty investment plan to finance big-ticket infrastructure projects, particularly the transport system, has added to concerns over the budget deficit and public debt.

The 2018 budget is set at 2.9 trillion baht, with 2.45 trillion in revenue, leaving a deficit of 450 billion. That deficit swells to 550 billion baht if the 100-billion-baht supplementary budget is taken into account.

According to Mr Apisak, the committee also yesterday approved a medium-term fiscal plan (2020-22) as required by the new Fiscal Responsibility Act, which puts more restrictions on government off-budget loan-seeking legislation, and the Budget Procedures Act.

Under the plan, the government needs to increase tax collection and reduce the government’s infrastructure expenditures through a public-private partnership and the Thailand Future Fund.

The Fiscal Responsibility Act, enforced from April 20, is designed to maximise budget spending and prevent politicians in the future from repeatedly using off-budget borrowing to finance projects.

Dechapiwat Na Songkhla, director-general of the Budget Bureau, said the medium-term fiscal plan requires central budget allocation that should not be less than 2% of the total fiscal budget or exceed 3.5% of the total fiscal budget.

Payment on the loan’s principal should be 2.53.5% of the total fiscal budget. Tied-over budget is required, but should not exceed 10% of each fiscal budget.