MOF Presentation

8/8/2019 MOF Presentation

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Thailands Fiscal Policy:Developments and Outlook

Fiscal Policy OfficeMinistry of Finance

28August

2002


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xpans onary sca po cy

actsasacushion forglobal

slowdownin 2001-2002

Fiscal stimulus as a reaction to

slower growth in exports. Planned deficit for FY2002 is

record high at 200 billion baht.

Greater flexibility in responding to

the economic situation: 58 billion

baht Emergency Reserve Fund.


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overnmen n a ves ave

playedasignificantrolein

driving theeconomy

On budget initiatives include the

Village Fund and Farmers Debt

Suspension.

Off budget initiatives include thePeoples Bank and the

Government Housing Banks

Mortgages for public servants


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Funds

National Village

Fund OfficeGovernment

Savings Bank

Government

Village Fund

Debt

service

from

budget

for 8years

80 billion

baht

73.4 billion

baht

Villagers

70.08 billion

baht

The village fund is a type of revolving fund.

The debt is included in the government guaranteeddebt figure. Principal repayment

from the budget is 10 billion baht for 8 years. Interest

rate is equal to 12 month fixed

deposit rate + 1.75%. Several surve s su est that villa ers use the fundFigures are as of


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Government Initiatives

(continued)

Farmers Debt Suspension: Highly

indebted farmers who are debtors of

BAAC are eligible for this program.

Farmers do not have to pay their debt for 3years. Government pays interest to BAAC

from its budget (8 billion baht this year and

6 billion baht in the next two year). 2.27

million farmers participate.

Peoples Bank: A Micro-credit scheme

operated by GSB without any burden in

the budget. At the end of July,


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Expansionary fiscal policy as acushion for global slowdown last

year

FY 2002 Fiscal outturn (October

2001-July 2002)

Planned fiscal adjustment inFY2003

Looking beyond next year:


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mon revenueco ec on smon revenueco ec on s

higherthantargetedhigherthantargeted

Total

revenue

collection

(Oct. 2001 -July 2002)

is 8.3%

higher than

targeted. Total

FY2002 net

revenue is

projected to

unit: billionbahtCumulativeComparedto Projected Comparedt

Revenue Target FY 2002 Target

10months % Revenue %

RevenueDept. 430.66 5.5 537.15 4.3ExciseDept. 172.18 12.7 203.74 11.9

Customs Dept. 808.54 -7.5 96.46 -8.8

Other Gov. Agencies 97.51 33.3 102.70 1.9

Total RevenueCollection 781.22 8.3 940.05 4.0Net Revenue 701.13 7.2 850.89 3.4

Compiledby: Fiscal Policy andPlanningDivision, FPO.


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excludingexcluding 5858 billionbahtbillionbaht

reserve fundisatrecordhigh.reserve fundisatrecordhigh. Thedisbursement for the FY

2002 budget,excluding 58billion bahtreserve fund,

is expectedto be recordhigh at93.4%.

Theremainin of

unit: billionbaht

10months Comparedto Projection

Disbursement 10month for

target (%) FY 2002

Budget Disbursement 827.48 0.20 1,000.80

FromCurrent FY 748.86 (0.16) 918.80

-- Capital Expenditures 148.82 - --- Current Expenditures 600.04 - -

Carry-over 78.62 3.73 82.00


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tobelowerthantargettobelowerthantargetbillionbaht10months Projection

Cumulative for

(Oct. 01-July02) FY 2002

Revenues 694.7 838

Expenditures 827.5 1,000.8

Budgetary Balance -132.8 -163.1

NonBudgetary Balance 11.8 -14.9

Fiscal Balance -120.9 -178.0

Public sector deficit (CG + Local

Authorities + Non-financial Public

Enterprises) is expected to be 149.7

billion baht or 2.9% of GDP


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year


2001-July 2002)

Planned fiscal adjustment startingFY2003



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e governmen w assumea

smallerroleinstimulating the

economyin FY2003

The budget is prepared under the assumption

that private sector will assume the mainengine of growth while monetary policy

becomes more effective.

The planned budget deficit in FY2003 is174.9 billion baht or 3.1% of GDP, compared

to 200 billion baht in FY2002 (3.6% of GDP).

Zero-based and performance based


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Strategy

Am t %

Total 999.9 100.0

1. Economc RehabilitaionandDevelopment 153.3 15.3

2. Structural Adjustment for Sustainable Competitiveness 55.9 5.63. Social Development,PovertyAlleviationandQualityof Life Enhancement 443.7 44.4

4. National SecurityandForeignAffairs 87.0 8.7

5. Public Manaement 260.0 26.0

Budet

Billion Bah

FY2003 budgetisbasedon 4 mai


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year


2001-July 2002)

Planned fiscal adjustment inFY2003



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or ng owar s sca

sustainability...

Current figure for Public debt/GDP is 54.8%(May 2002)

Direct government debt 25%

SOE debt 18%

FIDF liabilities 12%

The government publicly announced its

fiscal position target :

Public debt/GDP will not be higher than 65%

Debt service in the budget will not be higher

than 16%

The government aims to achieve balanced


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The fiscalizationof FIDF losses

1.4 trillion baht losses

FIDF 1

500 billion

FIDF 2

112 billion

FIDF 1

780 billion

The BOT is responsible for principal repayment

for interest payment.


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53.45

49.58

45.43

57.5057.2258.9759.1858.04 57.83

40

45

50

55

60

65

2000 2001 2002 2003 2004 2005 2006 2007 2008

%

ublic Debt/GDP graduallydecrease

inthemediumterm.


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15.8915.3815.5614.00

11.29

9.47

15.6215.22

9.04

5

7

9

11

13

15

17

2000 2001 2002 2003 2004 2005 2006 2007 2008

%

Debt Services/BudgetiscappedtoDebt Services/Budgetiscappedto

giveenoughroom forcapitalgiveenoughroom forcapitalexpenditure.expenditure.


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FiscalbalancecanbeFiscalbalancecanbe

achievedby FYachievedby FY20072007..

-2.5

-2.0

-3.8

-2.6

-1.4-1.2

-0.6

-0.0

0.4

-5

-4

-3

-2

-1

0

1

2000 2001 2002 2003 2004 2005 2006 2007 2008

%


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Ongoing effortin fiscalreform

Privatization program

Fiscal decentralization

Tax reform (including expansion of tax

base and import duty restructuring)

Ongoing effort to improve fiscal institutions

include the draft Budgetary Procedure Lawand the draft Public Debt Management

Law.

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