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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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Expansionary fiscal policy as acushion for global slowdown last
year
FY 2002 Fiscal outturn (October
2001-July 2002)
Planned fiscal adjustment startingFY2003
Looking beyond next year:
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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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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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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.