The economy is gradually recovering but government spending is getting out of hand and is a cause for concern, experts said yesterday. Pongpanu Svetarundra, director-general of the Comptroller-General's Department yesterday expressed his concern over the rising government spending on some items.
He said current spending accounts for 88 per cent of the government's total budget, leaving very little for capital spending.
"For every Bt100, Bt88 goes towards current spending (such as official salaries) and only Bt12 is left for investment spending," he said at the seminar hosted by the Fiscal Policy Office. Taking into account the government plan to borrow Bt800 billion to finance public investment over the next three years, it would run a fiscal deficit of about 7 per cent of gross domestic product, he said.
Public debt will jump to about 60 per cent of GDP in the next few years, up from the current 40-per-cent level.
He warned about spending on healthcare schemes for state officials, subsidy for farm products, financial support to local governments and debt repayment, which could go out of hand. "Previously the government spent about Bt20 billion or Bt30 billion on healthcare bills of state officials, now it has ballooned to about Bt60 billion a year," said Pongpanu.
There were fat on such spending that need to be eliminate, he warned.
The government would have to shoulder debt repayment of about Bt150 billion a year. "The interest payment on Bt800 billion would amount to about Bt20 billion a year," he lamented. The government's farm produce price-shoring scheme and universal healthcare subsidy programme are also increasing rapidly, he lamented.
"Over the next two or three years, such spending would be unsustainable," he said.
Pongpanu yesterday met noted economist Ammar Siamwalla at the Thailand Development Research Institute to discuss fiscal issues.
The government needs to take action now, otherwise it would not be able to balance the budget, he warned.
The government ran a fiscal deficit of about Bt500 billion for the previous fiscal year ended September this year. Expenditure was estimated at Bt1.9 trillion and revenue at Bt1.4 trillion.
The government has projected that public debt would peak in the next five years and then drop, based on the assumption that the economy would grow at about 4-5 per cent.
Dusit Nontanakorn, chairman of the Thai Chamber of Commerce, said the private sector was most worried about political instability. He said local firms had started to build inventory as more orders from foreign importers were coming.
Thanawat Polvichai, an economist at the University of Thai Chamber of Commerce, said that economic recovery remained fragile and consumers were still unsure about the future.
Tuesday, October 20, 2009
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