UTCC says budget delay will hit growth
The University of the Thai Chamber of Commerce (UTCC) has flagged concerns that the economy could expand by less than 2.5% this year if the annual budget bill for fiscal 2020 hits further snags after some MPs were reported to have voted in favour of the bill without being present in the House.
If the budget bill’s implementation is postponed to May, a seven-month delay from the start of the fiscal year on Oct 1, 2019, it will put state budget disbursement for new projects further behind schedule, hamstringing the country’s sagging economy, said Thanavath Phonvichai, president of the UTCC.
Moreover, it could affect drafting an annual budget bill for fiscal
2021, he said.
The validity of the 3.2-trillion-baht budget bill for fiscal
2020 is in limbo after 174 MPs requested a Constitutional Court ruling on the issue.
A former Democrat Party MP said two Bhumjaithai MPs cast votes in favour of the bill without being present in the House. With the request, submission of the budget bill for royal endorsement will have to wait until the court rules on its validity, and the budget is estimated to face another two-month delay.
To brace for a potential postponement, the government has requested the Budget Bureau prepare a contingency plan to alleviate the impact.
The Bank of Thailand last month cut the economic growth forecast to 2.5% for 2019 from 2.8% predicted last September and 2.8% for this year from 3.3%. But the 2020 growth projection has yet to take into account the further delay in the budget bill for fiscal 2020.
Mr Thanavath said the SME sentiment index for the final quarter of 2019 plunged to a record low, weighed by the gloomy growth forecast.
If growth of 2.5% in 2019 holds true, it will be the slowest expansion in five years.
Fourth-quarter and 2019 GDP readings are due to be released on Feb 17.
The business sentiment index for SMEs in the fourth quarter stood at 40.8 points, down 0.7 points from the previous survey and below the 50-point threshold implying negative business sentiment, according to a joint survey by the UTCC and SME Development Bank.
The SME Competency Index fell by 0.6 points to 47.2, and the SME Sustainability Index inched down 0.7 points to 50.4.
“Most SME indices fell below 50 points, resulting from a decline in sales and profitability and tight liquidity,” Mr Thanavath said. “In the survey, correspondents hoped the situation would improve in the first quarter, driven by state investment.”