Thread: Thailand : Infrastructure

Prasarn at ease with decree - The Nation

Prasarn at ease with decree

Sasithorn Ongdee
Wichit Chaitrong
The Nation January 28, 2012 1:00 am


Final draft on FIDF debt allays BOT chief's concerns; promises not to overburden banks

BOT Governor Dr Prasarn Trairatvorakul yesterday said he was now less concerned about the executive decree on paying off the Financial Institutions Development Fund (FIDF)'s Bt1.14-trillion debt.

Speaking at a press conference on the BOT's policy direction in 2012, he said his concerns were allayed by the final draft of the decree, which is different from the first draft proposed late last year.

"The proposals before the Cabinet regarding the executive decree three times since late last year left me with different feelings. Before the New Year, I was much more concerned about it, as the idea of transferring the FIDF debt to the BOT would have technically meant monetisation of public debt, or printing money," said Prasarn.

"After the changes in the final draft, I have fewer concerns," he said.

The executive decree regarding the repayment of the FIDF debt, which became effective on Thursday, authorises the BOT to collect more premiums from financial institutions, implying that the burden is transferred to the financial institutions.

'We can manage'

"Now, we think we can manage. If we can reduce the principal amount, the interest will be also reduced," said Prasarn. "According to our formula, we expect to pay off the debt within the set time frame but on the assumption that a financial crisis does not happen again."

He said the additional contribution might increase the burden on banks. But, the BOT would not like to burden them too much and erode their financial position. After discussing with bankers what the premiums should be, the BOT will hold talks with Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong. Prasarn said the BOT was confident of managing the repayment of the FIDF debt. The sources for funds are additional premiums from commercial banks, assets of the FIDF, including shares of Krung Thai Bank.

"The executive decree seems a problem at hand. But, this can have an impact on the central bank's policy in the long term," he conceded.

Democrat leader Abhisit Vejjajiva said his party did not agree with the emergency decrees and the party will petition the Constitution Court to consider whether two decrees breached the Constitution: one is the decree authorising the Finance Ministry to borrow Bt350 billion to finance post-flood construction projects, and the other requiring the BOT to pay off debt of Bt1.14 trillion incurred by the FIDF. The two decrees might be in violation of the Constitution as there is no emergency for issuing such decrees, he said.

He also did not agree with the decree authorising the central bank to provide soft loans of Bt300 billion to flood victims. He said the government could use other means to provide soft loans to flood victims by subsidising the bank via its annual budget. The government wants to put all the burden on the central bank, he said. The decree also states that damage should have been suffered last year, which means flood victims in the South this year will not be covered by the decree, said Abhisit.

The Democrat chief, however, said he agreed in principle with the setting up of an insurance fund that would provide flood protection to companies and people. Abhisit questioned whether the size of the insurance fund was too small. There is not much detail about management of the fund, he said.

Abhisit also referred to the Constitution Court ruling in favour of the previous Democrat-led coalition government for issuing an emergency decree to cushion the economy from the global financial crisis.

The previous case is different from the current one, he said. "Now, there is no emergency to borrow Bt350 billion as it does not mean it would solve the flooding," he said.

Senator Kamnoon Sithisamarn said senators would also petition the Court to rule whether the debt decree violated the Constitution's Article 184. He said that there is no emergency requiring the government to issue such a decree. So far, 47 senators have signed the petition, he added.

Money for roads is needed in Issan as the suger-cane trucks have destroyed the country roads.

Legal challenge to financial decrees filed
30/01/2012

The Democrat Party has submitted a petition to House Speaker Somsak Kiatsuranont, asking that he request the Constitution Court for a ruling on two financial executive decrees.

The petition, signed by 128 members of parliament, was on Monday submitted by Democrat deputy leader Korn Chatikavanij, MPs Wirat Kalayasiri, Atthawit Suwanphakdi and Thavorn Senniam.

The opposition is asking that the court to rule whether the issuing of the two financial executive decrees was in violation of Article 184 of the consitution, as there is no emergency which requires that they be issued.

The first decree allows the government to transfer full responsibility for repayment of the 1.14 trillion baht in debt from the 1997 crisis to the Bank of Thailand. The other allows the government to seek loans amounting to 350 billion baht for water management programmes and flood restoration and rehabilitation.

"I think the Constitution Court's deliberation will impact economic stability and security," said former finance minister Korn.


Democrat Party deputy leader Korn Chatikavanij (left) submits a petition to House Speaker Somsak Kiatsuranont, asking him to request the Constitution Court for a ruling on two financial executive decrees on Jan 30, 2012.
(Photo by Thiti Wannamontha)

If the cabinet has the power to enact laws without the involvement of legislators, there will be a negative impact on economic stability and confidence, he said.

House Speaker Somsak said that he will forward the petition to the Constitution Court as quickly as possible.

In the meantime, the House, which will meet again on Feb 1, will not deliberate the two executive decrees and await the charter court's ruling on the matter.

"If the Constitution Court rules that the two executive decrees breach the charter, the government will then decide whether it will step down, but this is not required by the law," Mr Somsak said.

This morning, Mr Korn said in a message posted on FaceBook that his party will continue its efforts to protect the country from being robbed by the Pheu Thai-led government.

"Today, we [the Democrat Party] will petition the Constitution Court for an interpretation on whether issuing the executive decree to seek 350 billion baht in loans is considered a use of dictatorial power in the parliament.

"The government intends to avoid scrutiny by legislators and the executive decree will have a negative impact on economic stability," said the Democrat deputy leader.

The law would enable the government to borrow as much money as it wants. The government could then disregard its spending, he said.

"When there is too much debt, it could just transfer the burden to others," Mr Korn said.

He said fugitive former prime minister Thaksin Shinawatra had been negotiating fuel issues with different countries, coinciding with the government's plan to privatise national energy conglomerate PTT Plc.

"We must be alert about the government's intentions because they will affect the country and its people," he said.

bangkokpost.com

http://www.bangkokpost.com/news/poli...ity-of-decrees

Charter court agrees to rule on legality of decrees

• Published: 6/02/2012 at 04:02 PM
• Online news: Politics

The Constitution Court on Monday accepted for consideration petitions filed by parliamentarians seeking a ruling on the constitutionality of two post-flood financial executive decrees.



One of the petitions was filed by 128 MPs of the Democrat Party on Jan 30 asking the court to rule on the legality of two executive decrees issued by the government - one for the Finance Ministry to seek 350 billion baht in loans, and the other to transfer 1.14 trillion baht in debt from the 1997 financial crisis from the Finance Ministry to the Financial Institutions Development Fund (FIDF).

The other petition was filed by 69 senators on Jan 31 seeking the court's ruling on the constitutionality of the executive decree to transfer the 1.14 trillion baht debt to the FIDF, which is under the central bank.

Court spokesman Pimol Thampithakpong said the Constitution Court judges agreed at a meeting today to accept the petitions for consideration. It would be about 30 days before a ruling could be made.

Democrat leader Abhisit Vejjajiva said the government should not accuse the opposition of obstructing its flood prevention operations just because his party filed a petition against the two financial executive decrees.

"The government should stop blaming others and should instead concentrate on solving flood problems," Mr Abhisit said.

Some of the government's most immediate tasks were to set up a model to determine the flow of floodwater and accurately analyse the amount of water in the two months before the next potential flooding begins, he said.

"I agree with the idea that water management should be separated from the bureaucratic system because there have been many problems in the past and there was political interference, preventing management from achieving its target," the opposition leader said.

The former prime minister said he was concerned that the government was still unclear about how it would tackle flooding in different areas.

The government should work with local communities as they had a better knowledge of their areas. However, these communities should not create a flood prevention plan on their own since it would affect other areas as well, he said.


Former finance minister Korn Chatikavanij (left) and ex-prime minister Abhisit Vejjajiva (Photo REUTERS)

Mr Abhisit said the government should act as a coordinator in exchanging information and determine a strategy to ensure optimum results from water management.

Democrat deputy leader Korn Chatikavanij said in a message posted on FaceBook on Monday that the government was trying to make the excuse that it would not be able to work without the 350 billion baht in loans.

The government can carry on its work even if the court is still deliberating on the executive decrees, he said.

Mr Korn said that he did not stop working when Pheu Thai filed a similar petition against the previous administration.

"The most important issue is that the government still does not have clear investment and spending plans and there is no inevitable urgency [as stated in the constitution] to require the issuing of the executive decrees," said the former finance minister.

Deputy Prime Minister Kittiratt Na-Ranong was wrtonfg in trying to convince the parliament that the loans were needed to boost the confidence of foreign investors, because they were not confident how the government would spend the money, Mr Korn said.

"I'm worried that if the government is able to borrow money whenever it wants, the intention to control financial discipline will fail," he said.

Only takes one major natural disaster for the post-haste circus to kick in.

Chalerm: No worries about 2 decrees | Bangkok Post: news

Chalerm: No worries about 2 decrees

• Published: 8/02/2012 at 12:30 PM
• Online news: Politics

The government does not have to take responsibility if the Constitution Court rules that two financial executive decrees it has issued are unconstitutional, Deputy Prime Minister Chalerm Yubamrung said on Wednesday.

One of the decrees allows the government to seek 350 billion baht in loans for water management programmes and flood rehabilitation and restoration, and the other allows the Finance Ministry to transfer 1.14 trillion baht in debt from the 1997 financial crisis to the Financial Institutions Development Fund (FIDF) which is under the Bank of Thailand.

The Constitution Court has accepted petitions filed by 128 Democrat MPs and a number of senators for it to rule on the constitutionality of the two decrees.

If the Constitution Court ruled that the two decrees were unconstitutional, the government would not have to take any responsibility as there is no law requiring it to do that, he said.

Mr Chalerm said the government had prepared a way out. It could propose the two decrees as ordinary bills for the House of Representatives to approve in three straight readings.

"There is no tradition or law requiring the government to show any responsibility. It is not necessary for the prime minister to resign, if that happens. We can still get House approval for them in three readings," he said.

He said the government's stability would not be affected.

Originally Posted by longway

^ Is this actually true, that the PT have decided how much they are going to spend before they know what they are going to spend it on?

Who in their right minds can defend a government like this? Oh wait.....

Maybe you should get out a bit as this is common practice with governments all over the world.

Court to probe legality of flood-related decrees | Bangkok Post: news

Court to probe legality of flood-related decrees

Opposition, senators say funds not urgent

• Published: 15/02/2012 at 12:00 AM
• Newspaper section: News

The Constitution Court will today begin a hearing on the legality of two executive decrees.


Science and Technology Minister Plodprasop Suraswadi, left, briefs Prime Minister Yingluck Shinawatra during her inspection of Bung Boraphet in Nakhon Sawan yesterday. The swamp is one of the government’s many flood prevention projects aimed at creating large water retention areas. PATTANAPONG HIRUNARD

The Democrat Party and a group of senators have asked the court to rule on their constitutionality.

The Democrats and Sen Kamnoon Sitthisamarn, who represents a group of 69 senators, are petitioning the court to rule whether the decrees issued as part of the government's flood management spending plans violate the constitution.

Section 184 of the constitution stipulates that an executive decree can only be issued for urgent matters but the government's financial plans were not that urgent, Mr Kamnoon said.

One decree allows the government to seek 350 billion baht in loans for water management projects and flood rehabilitation work.

The other is to allow the Finance Ministry to transfer responsibility for 1.14 trillion baht in bailout debt from the 1997 crisis to the Bank of Thailand's Financial Institutions Development Fund.

The decrees were among four executive decrees approved by the cabinet on Jan 10.

The decrees were proposed by the Strategic Committee for Reconstruction and Future Development and Strategic Formulation Committee for Water Resources Management.

They are aimed at rebuilding the country and ensuring that last year's flood disaster will not be repeated.

The other two decrees sought to set up a 50-billion-baht fund to provide flood insurance for investors and to amend central bank regulations to allow it to extend 300 billion baht in soft loans to financial institutions.

Wirat Kalayasiri, head of the Democrat Party's legal team, said deputy Democrat leader Korn Chatikavanij will explain to the court how the decrees violate the constitution.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong is expected to make his case before the court on behalf of Prime Minister Yingluck Shinawatra, who is in the middle of her five-day post-flood inspection of seven provinces in the lower North and the Central region.

Mr Wirat said he hopes the hearings can be broadcast live on television.

"This is not about pursuing our own interests," Mr Wirat said.

"The reason we are opposing the decrees is because we don't want the public to be forced to shoulder a huge debt burden."

Sen Kamnoon, who will also testify today, said a live broadcast would help the truth to come out.

The court is expected to give its ruling in 30 days.

Strange timing, this borrow and spend thing has worked so well for Greece, Italy and Portugal it's just a perfect time for Thailand to jump into the frenzy.

Originally Posted by BobR

Strange timing, this borrow and spend thing has worked so well for Greece, Italy and Portugal it's just a perfect time for Thailand to jump into the frenzy.

I am really not a fan of deficit spending. But if there ever can be a reason urgend flood prevention is one of them. Of course it would be better to cancel military procurement instead. Who believes the present government is strong enough to do that?

Record Debt Sales Seen For Thailand After Floods | The Jakarta Globe

Record Debt Sales Seen For Thailand After Floods

Yumi Teso | February 17, 2012

Thailand is expected to sell the most debt on record this year as infrastructure is rebuilt following its worst floods in seven decades, according to the Thai Bond Market Association.

The government plans to sell about 500 billion baht ($16.2 billion) of bonds in the first nine months of 2012, compared with 512 billion baht for the whole of 2010, which was the most since the TBMA began collecting the data in 2002, the group’s president, Niwat Kanjanaphoomin, said in Bangkok.

Thai companies may sell 300 billion baht of debt this year, the most since 2009 and up from 212 billion baht in 2011, Niwat said.

Prime Minister Yingluck Shinawatra has pledged to spend 350 billion baht on water-management projects to avoid a repeat of last year’s floods, which spread across two-thirds of the country and crippled thousands of factories.

PTT, Thailand’s biggest company, last month revived a planned sale of 20 billion baht of bonds it postponed in November, and Bank of Ayudhya plans to sell 20 billion baht of debt to fund new loans.

The yield on Thailand’s five-year government bond has dropped 28 basis points in the past six months to 3.22 percent on Thursday and the rate on corporate notes has slumped 51 basis points to 3.5 percent, according to data compiled by Bloomberg and the TBMA.

“Yields are shifting down, giving lower costs for the issuer, and it’s also time to restart projects and new investment postponed after the floods,” Niwat said. “The government has a plan to use its budget to restore confidence and build some protection from the floods.”

The TBMA’s forecast for bond sales in the first nine months of this year excludes potential government debt offerings as part of its 350 billion-baht budget for improving waterways, Niwat said.

Thailand’s economy probably shrank 5 percent in the three months through December from a year earlier, according to the median estimate of 14 economists. That would be the first decline since 2009.

“Without external factors, an increase in issuance is negative for Thai bonds,” said Wee-Khoon Chong, a strategist at Societe Generale in Hong Kong. “There is concern that the fiscal situation will further deteriorate for Thailand, more so due to the floods.”

Thailand’s long-term local-currency debt is rated A- by Standard & Poor’s, two levels below South Korea and one step below Malaysia.

Thai financial institutions are also selling more debt as they prepare to start paying higher fees in July, Niwat said. Banks will pay an annual amount equivalent to 0.47 percent of their total deposits to help repay state debt, the government and the central bank said this month.

Global funds will probably buy more Thai securities because of uncertainties over Europe’s debt crisis, Niwat said. He expects foreign holdings of Thai government bonds to increase to more than 500 billion baht by the end of this year.

The government has 5.2 trillion baht of outstanding debt, according to TBMA data.

Bloomberg

Ruling on decrees 'no huge threat' - The Nation

Analysis

Ruling on decrees 'no huge threat'

THE NATION February 21, 2012 1:00 am


Damage control moves already in place in case court rules against govt

The Yingluck government's damage-control effort over the two controversial executive decrees has begun - regardless of whether any real damage will occur or not. Government leaders and key members of the ruling party have come out one after another to declare that it would not be the end of the world if the two decrees were shot down by the Constitution Court.

Thai politics will likely be distracted a little from the Four Seasons Hotel controversy this week. The Constitution Court will return to the front pages with tomorrow'sWednesday's ruling on the two decrees. The excitement, however, could be a flash in the pan.

The good news for opponents of the government is that the administration may lose some face. The bad news for them is that political life should return to normal after a few days. If the court kills either decree or both, there will be calls for the government to show responsibility, but such a political game will be short-lived.

"The Opposition are just opportunists," said Pichit Chuenban, a Pheu Thai party-list MP who is a member of the ruling camp's legal team. "The problems concerning the decrees involve technicalities, not principles. Even if the Constitution Court disagrees with the government regarding the question of urgency, it will not mean the court disapproves of the principles behind the decrees."

The Democrat Party's front man in the campaign against the two decrees is former finance minister Korn Chatikavanij. In a recent interview, he said he was particularly concerned about the decree that would allow the government to borrow Bt350 billion as emergency flood-prevention funds. According to Korn, this borrowing decree makes a blatant mockery of Parliament's power to scrutinise state budgets and could set a very bad example for future governments.

The borrowing decree, however, may scrape through the Constitution Court's review. Facing a more uncertain future is the other decree, which seeks to transfer the staggering debts of the Financial Institutions Development Fund (FIDF) to the Bank of Thailand.

In the eyes of many analysts, the former decree can be classified as urgent, although the government has been far from clear-cut on how it plans to prevent future flooding. The government has had a tougher time trying to explain why the FIDF debt requires an emergency decree. Unlike the threat of floods, the FIDF debt issue has been a financial problem for years.

Democrat leader Abhisit Vejjajiva has led calls for the government to "show responsibility" if either decree is rejected by the Constitution Court. "Traditionally, it used to be Parliament that decided if a government's executive decree was legitimate," Pichit said. "It's not written anywhere that the government would have to resign if the Constitution Court rejects an executive decree."

It is likely that the borrowing decree will get the Constitution Court's nod, but the FIDF decree will be rejected. If that happens, nobody will be particularly upset or happy. If the opposite happens, or if the court rejects both decrees, the political impact would be harder on the government, although the administration would be unlikely to collapse under the pressure.

It will require at least six of the nine Constitution Court judges to effectively reject either decree. This means a 5-4 vote in favour of rejection is not enough to kill the decrees.

The Yingluck government has made it clear that rejection by the court would not stop it from seeking what it wants. The administration will simply return to the normal legislative route, which would only take a little more time.

Verdict may hinge on 'urgency' of debt moves - The Nation

BURNING ISSUE

Verdict may hinge on 'urgency' of debt moves

THE NATION February 21, 2012 1:00 am


Tomorrow the government is likely to see one of two wishes come true - and unfortunately its unfulfilled desire looks set to trigger a legislative battle which could drag on for about a year.

The Constitution Court is due to rule on the legality of two executive decrees - one on management of Bt1.14-trillion in debt by the central bank, the other on Bt350 billion in finance sought for flood control projects.

The two decrees are part of a four-decree package aimed at preventing a repeat of last year's flood disaster.

The four decrees were based on a concept by respected economist Virabongsa Ramangkura. Deputy Prime Minister Kittiratt Na Ranong translated the idea into decree provisions.

Former finance minister Thirachai Phuvanatnaranubala agreed to sponsor the decrees despite objecting to certain provisions before he was shuffled out of the Cabinet last month.

Two of four decrees took effect without any legal dispute. But the Democrats and senators questioned the other two, prompting the high court's review.

The judicial outcome will go one of three ways - a total victory for the two decrees in question, a complete defeat, or partial approval in which one is passed and another rejected.

In order to pass or strike down the decrees, the high court will form a decision based on two legal issues - whether the provisions were designed to mitigate or prevent the disaster and whether the government has justified urgency to bypass the normal legislative process.

When Virabongsa formed his idea on the decrees, he envisioned the future of a post-flood economy. He wanted to bring the seasonal floods under control as well as ensure new economic heights.

The four-decree package was designed to boost business confidence in the country's commitment, technical capability and finances for flood control.

From the government's point of view, the decrees were deemed necessary because work must be implemented before the arrival of seasonal floods. The legislative process was not an option due to time constraints.

On top of flood control plans, Virabongsa took an extra step to try and manipulate the cap on public debt in order to ensure fiscal room to finance such major projects.

It is the extra step that has triggered the government's legal wrangling. Virabongsa is trying to manipulate state accounting by the transfer of Bt1.14 trillion in debt, incurred by the central bank's Financial Institutions Development Fund during the 1997 crisis, from the government to the Bank of Thailand.

Without the debt transfer, the government has almost no room for fiscal measures to improve the economic infrastructure because public debt is hovering at almost 10 per cent of the annual budget. The limit is 16 per cent.

Democrat MP Korn Chatikavanij spearheaded opposition to the debt transfer and flood-control financial package. He said the government rushed to outline borrowing plans even before flood-control projects got off the drawing board.

The Yingluck government has subsequently released its spending plans, hence lessening the opposition's pressure on flood-control financing.

The gist of tomorrow's decision will boil down to the fiscal discipline in connection with the Bt1.14 trillion debt transfer. Although the government has tried to link the fiscal issue to flood control, Korn has made a convincing argument that the issue is not urgent enough to justify use of a decree.

If the high court concurs with Korn's argument, the government will be obliged to sponsor and enact legislation in lieu of a decree for debt management. But legislative debate over this is expected to be a worry for two reasons - the issue of fiscal discipline is sensitive and bankers are strongly opposed to the central bank having to shoulder such a huge amount of public debt.

Govt waits for ruling on decrees | Bangkok Post: news

Govt waits for ruling on decrees

Court loss will trigger backup plan in House

• Published: 22/02/2012 at 02:50 AM
• Newspaper section: News

The government is looking to resubmit the two executive decrees as bills and push for their passage through parliament if the Constitution Court rules today that the decrees violate the constitution.

Pheu Thai Party spokesman Prompong Nopparit said the party was concerned that if the court rules against the two decrees, the opposition Democrat Party would take advantage of the ruling to discredit the government and pressure Prime Minister Yingluck Shinawatra into resigning.

The court is due to rule Wednesday on the legality of the decrees.

If the decrees are ruled to be unconstitutional, the government's recourse will be to resubmit them as bills for parliamentary endorsement, which will probably delay the government's flood prevention projects, Mr Prompong said.

However, the government will respect the court's decision whichever way it goes, he said.

The Democrats and a group of 69 senators have petitioned the court to rule whether the decrees issued as part of the government's flood management spending plans violate the constitution.

Section 184 of the constitution stipulates that an executive decree can be issued only for urgent matters but the government's financial plans were not that urgent, they argued.

One decree authorises the government to borrow 350 billion baht to finance water management projects and flood rehabilitation work.

The other is to allow the Finance Ministry to transfer repayment responsibility for 1.14 trillion baht in bailout debt from the 1997 crisis from the annual budget to the Financial Institutions Development Fund.

The decrees were among four executive decrees approved by the cabinet on Jan 10.

The other two decrees sought to set up a 50 billion baht fund to provide flood insurance for investors and to amend central bank regulations to allow it to extend 300 billion baht in soft loans to financial institutions.

They are aimed at rebuilding the country and preventing a recurrence of last year's floods.

Pheu Thai MP for Nan Cholnan Srikaew said the party's legal team has a back-up plan in the event the court rules against the decrees.

It would change the decrees into bills and push for their passage through parliament, which would take up to three months.

Mr Cholnan admitted the government would suffer humiliation if both the decrees or one of them do not clear the court. But such a loss of face would not rock the government's stability, he said, adding the decrees were necessary to address urgent problems in the country.

A Pheu Thai source said the party's legal team did not believe the court would rule in favour of the government as the court is likely to give weight to the requirement of urgent need as stipulated in Section 184 of the constitution.

However, the source said PM Yingluck and Deputy Prime Minister Kittiratt Na-Ranong would not need to quit to take responsibility if the government loses in court.

They will have to resign only if the government's financial bills fail to receive parliamentary endorsement, the source said, adding the constitution obviously authorises the executive branch to issue executive decrees.

Another source said the decree to shift the repayment responsibility for 1.14 trillion baht in bailout debt is likely to be rejected by the court, given that it did not meet the urgent needs requirement.

Opposition chief whip Jurin Laksanavisit said Tuesday that if the decrees are ruled to be unconstitutional, the government must take responsibility.

The government's failure to take responsibility would set a bad example for future governments to do the same and get away with it without parliamentary scrutiny while the legislative branch would be reduced to a rubber-stamp parliament, Mr Jurin said.

Pimol Thampitakpong, a spokesman for the Constitution Court, said yesterday at least six out of nine votes of the nine members of the charter court's judge panel would be required for a ruling that an executive decree is in violation of the constitution.

Court: Financial decrees constitutional | Bangkok Post: news

Court: Financial decrees constitutional

• Published: 22/02/2012 at 05:59 PM
• Online news: Local News

The Constitution Court on Wednesday ruled that two executive decrees related to water management and post-flood rehabilitation and debt management issued by the cabinet do not violate the constitution.



One decree authorised the government to seek 350 billion baht in loans to finance water management projects and flood rehabilitation work.

The other required the Finance Ministry to transfer full repayment responsibility for 1.14 trillion baht of bailout debt accrued from the 1997/98 financial crisis from the Finance Ministry to the Financial Institutions Development Fund, which is under the Bank of Thailand.

Democrat Party MPs and 69 senators earlier petitioned the Constitution Court to rule whether the two decrees are constitutional. They said the two decrees might contravene Section 184 of the constitution which stipulates that an executive decree can be issued only as a matter of urgency.

The Constitution Court today convened a meeting of the nine judges on the bench at 9am and read out its ruling on the two decrees at 2pm.

In the matter of the decree to allow the Finance Ministry to seek 350 billion baht in loans to finance water management and flood rehabilitation projects, the court unanimously ruled that it is in line with the prerequisites mentioned in Section 184 paras 1 and 2 of the constitution, because the government is urgently in need of money to cope with problems arising from the flood disaster had affected the country's infrastructure and financial security.

The court voted 7-2 to confirm the constitutionality of the second decree to enable the government to transfer the responsibility for the 1.14 trillion baht debt from the Finance Ministry to the FIDF.

In doing this, the government could reduce the burden of allocating a fund from the annual budget to pay for the debt's interest. The money should instead be used for other purposes.

The transfer of the debt was necessitated by the flood crisis. There was no evidence indicating that the cabinet, in issuing this decree, acted dishonestly or in violation of the charter, the court said.

At least six of the nine votes of the nine judges are required for a ruling that an executive decree is in violation of the charter.


Deputy Prime Minister Chalerm Yubamrung (File Photo)

Earlier today, key cabinet ministers Deputy Prime Minister Chalerm Yubamrung and Justice Minister Pracha Promnok said if the two decrees were found by the court to be unconstitutional the government would resubmit them to the House of Representatives as ordinary bills and would seek their quick passage in three straight readings.

Mr Chalerm, speaking before the court's decisions were announced, said the government would not be required to resign if the two executive decrees were over-ruled by the court.

He said the government viewed the loan decrees as an urgent matter for use in flood management. If the court disagreed it would not be a disgrace and there would be no need for the government to resign.

"If the Constitution Court does not think that the decrees are urgent then that is its judgement but the government is not obligated to show responsibility by quitting," he said.

If the court does rule the decrees invalid it would pose a hurdle for the government in managing flooding and the people would suffer, he said.

He urged the opposition Democrat Party to stop treating the decrees as a political game.

He said that if the decrees were rebuffed the government would pass legislation through the parliament instead.

Court's ruling widens Govt's borrowing room - The Nation

Court's ruling widens Govt's borrowing room

The Nation February 22, 2012 2:59 pm

The Constitution Court on Wednesday ruled that the two executive decrees comply with the Constitution's Article184, leaving the government with several bullets to finance its post-flood investment.

Economic stability and unavoidable urgency were cited as the reasons for the ruling.

The borrowing executive decree will allow the government to finance 32 long-term flood-protection plans, which require a total investment of about Bt360 billion. The decree empowers the Finance Ministry to borrow Bt350 billion in Baht or other currencies by June 30, 2013.

The second decree will give even more room for investment as the government need not to set aside a budget for principal and interest payment for the Financial Institutions Development Fund (FIDF), starting from the 2013 fiscal year.

In the 2012 fiscal year, Bt68.43 billion was set aside for the purpose. The amount accounted for 2.9 per cent of public expenditures in the year and 16.2 per cent of total investment budget.

According to the World Bank's preliminary estimate, the fourth-quarter floods caused damage of Bt1.4 trillion to the public and private sectors.

Private sector lauds two decree approvals | Bangkok Post: news

Private sector lauds two decree approvals

Hope now is for swift construction projects

• Published: 23/02/2012 at 08:04 AM
• Newspaper section: Business

Business leaders exhaled yesterday after the Constitutional Court endorsed two executive decrees, especially one regarding 350 billion baht in emergency loans.


Business leaders agree that yesterday’s ruling bodes well for the economy, as several megaprojects can now begin in earnest, attracting more investment and restoring confidence. PATTANAPONG HIRUNARD

The private sector is pinning its hopes on the government to proceed with megaprojects quickly afterward even though businesses are lukewarm to the idea of imposing decrees. "This is just a relief, as earlier we worried the decrees may not get endorsed, given the public doubts," said Pornsil Patchritanakul, deputy secretary-general of the Board of Trade of Thailand.

"The government can now proceed with projects immediately, as the committees in charge have already recommended projects to tackle, such as floodways."

But he said there is concern about whether the government can execute these projects in time with transparency.

Tanit Sorat, a vice-chairman of the Federation of Thai Industries, said the government can now cut its interest burden by transferring the responsibility in the 1.14-trillion-baht debt of the Financial Institutions Development Fund (FIDF) to the Bank of Thailand.

The issue has been contentious, raising questions of possible government interference with the central bank.

"This allows the Pheu Thai government to have more funds to finance public works, and we hope they can manage this budget efficiently," said Dr Tanit.

"There is huge liquidity available in Thailand, even as the global economy does not look good."

Charl Kengchon, managing director of the Kasikorn Research Center, said the court's endorsement of the decrees will build confidence, particularly in the government's flood management.

"With the legal process past, the focus shifts to fulfilment of flood-prevention measures," he said. "Now the government should speed up implementation with the decrees' endorsement."

As for the FIDF debt transfer, no new issues should arise after the settlement on a new fee, said Dr Charl.

Commercial banks should adjust themselves ahead of the new regulation.

Govt move was warranted by the situation: judges - The Nation

Govt move was warranted by the situation: judges

AVUDH PANANANDA
THE NATION February 23, 2012 1:00 am


The government came out victorious yesterday after the Constitution Court approved its two executive decrees designed to prevent a repeat of last year's flood crisis.

The nine-member court unanimously ruled that the decree earmarking Bt350 billion to finance flood-control projects was constitutional, though the decree on the Bt1.14-trillion debt management won seven votes. In order to approve or veto a decree, at least six votes are needed.

The two decrees were put under judicial review at the request of the Democrat Party and senators, who argued that the government had no justification to bypass the normal legislative process by enacting a decree instead of through Parliament.

In reaching the verdict, the court outlined the Constitution in terms of sanctioning the legislative process as per Articles 142 to 153 as well as the exception as per Article 184. Although democratic rule prescribes parliamentary scrutiny on the enactment of laws, the government is allowed to issue decrees in order to avert public calamity, the verdict said.

Paragraphs one and two of Article 184 warrants the issuing of a decree if it ensures public safety, economic security and mitigates disaster. The court pinpointed these conditions as the basis for its decision on whether the two decrees were constitutional.

Factual circumstances were also used to determine if the decrees in question met the requirements of Article 184. The two decrees had been passed in the backdrop of last year's flood crisis, when some 2.6 million people were affected and the damage was worth about Bt1.4 trillion.

Economic growth dropped from the forecast rate of 4 per cent to 1 per cent and flood-relief operations cost about Bt130 billion. Furthermore, the country is in no position to suffer a repeat of the crisis because the authorities neglected to implement two flood-prevention plans for the Chao Phraya River basin in 2000.

As for the decree on financing flood-control projects, the government needs to complete its loan arrangements before June 2013. As part of the arrangements, the Finance Ministry needs to present its spending plans justifying the loans to Parliament for scrutiny within 60 days.

The Bt350-billion loans will comprise Bt17 billion for short-term control measures in the Chao Phraya River basin, Bt300 billion for long-term projects and Bt40 billion for flood control in other river basins.

The court ruled that the decree was designed to tackle the crisis and ensure economic security, which met the requirements of Article 184, paragraph one.

Last year's floods affected 841 factories in key industrial estates, inflicting untold damage to the economy and the world supply chain. Without necessary funding for flood-control projects, the manufacturing sector might end up moving overseas.

Besides, the flood-control projects could not be financed under the 2011 national budget, because it went into effect on February 5. Even though the budget has Bt120 billion in unallocated funds, the amount is far less than the Bt350 billion needed. Besides, if the government was to sponsor a supplementary budget bill, it may not be vetted in time for this year's seasonal floods.

As for the decree transferring the Bt1.14-trillion debt incurred by the Financial Institutions Development Fund (FIDF) during the 1997 financial crisis, the court concurred with the government's argument that the debt was a burden and took focus away from flood control.

Over the past 15 years, the FIDF debt cost the country about Bt67 billion in annual interest and successive governments have only been able to pay 15 per cent of the loan. Under the debt-management plan, the Bank of Thailand would assume responsibility and complete repayment within 26 years. This would make at least Bt60 billion available for the government to improve its water management and ensure a stronger economic future.

At present, servicing the FIDF loan amounts to about 60 per cent of the government's investment outlay.

The high court ruled that the debt-management decree linked to the flood-control projects was in line with ensuring economic security, hence it met the requirement of Article 184, paragraph one.

It further decided that there was enough of an urgency to warrant the decree, because the government needed to free up funds to finance flood control starting with the 2013 budget. The decree allows the government to stop servicing the FIDF loans in time for the next fiscal year.

Thai-ASEAN News Network - Kittirat Steps up His Work after Two Loan Decrees Endorsed

Kittirat Steps up His Work after Two Loan Decrees Endorsed

UPDATE : 23 February 2012

The Finance Minister said after the Constitution Court had approved a legal status of the two suspended loan decrees.

Finance Minister Kittirat Na-Ranong clarified after the Constitution Court had endorsed the constitutional status of the two loan decrees that allow the government to transfer the Financial Institution Development Fund or FIDF's debt to the Bank of Thailand or BOT, while the other executive decree will authorize the Finance Ministry to borrow 350 billion baht for water resources management.


He said the ministry will prioritize domestic financial sources. However, he could not unveil details-in-depth, saying the Strategic Committee for Water Resources Management or SCWRM will hold a meeting today to finalize the water management plan.

In the initial stage, 300 billion baht would be allocated to manage Chao Phraya River's basin, while 40 billion baht is set aside to develop 17 tributaries nationwide.

Kittirat added he is going to fully coordinate with related agencies to maximize water management efficiency. He pledged that the government is capable to deal with the upcoming water in the event that this year's water volume is less than last year's amount.

Nevertheless, a number of farmers would suffer from flooding as they sacrifice their farmland as flood retention areas. Consequently, farmers are asked not to cultivate from July to October when the water is expected to reach its peak.

http://www.bangkokpost.com/news/loca...heads-to-house

B1.6 trillion for infrastructure

• Published: 29/06/2012 at 02:35 AM
• Newspaper section: News

The government has announced its plan to forward a bill to parliament requesting to borrow 1.6-2 trillion baht over the next six months for investment in infrastructure projects.


Kittiratt: Mass transit, port to get boost

The Yingluck Shinawatra administration will also aim to push through the disbursement over the next six months of 350 billion baht which it mobilised with an executive decree earlier this year.

Kittiratt Na-Ranong, a deputy prime minister and the finance minister, said the infrastructure bill that the government plans to forward for deliberation by parliament will aim to boost the capacity of facilities like Laem Chabang deep sea port, Suvarnabhumi airport and Greater Bangkok's mass transit system.

• Curbs urged: 'Too much development'

The money will also be used to invest in new projects including a high-speed train and dual-tracked railways.

"This legislation to borrow the money will be pushed forward as a bill, rather than through an executive degree, although I think implementation of projects like upgrading Laem Chabang seaport must happen urgently," Mr Kittiratt said.

Mr Kittiratt said the government remained committed to its election pledge of increasing the minimum wage nationwide to 300 baht early next year, having already increased it in seven pilot provinces this April.

Mr Kittiratt said transferring management of the Financial Institutions Development Fund's total liabilities to the Bank of Thailand could free up fiscal space by 1.14 trillion baht, even though the liabilities still remain on the government's books.

Overall, public debt, including liabilities of the financial bailout fund, is currently 4.9 trillion baht, or 40% of GDP.

Mr Kittiratt also on Thursday defended the cabinet's stance in referring to the House Nasa's climate and weather project at U-tapao airport, saying the decision was made to avoid clashes in society. Nasa has shelved the project after the government failed to give its approval by deadline.

Virabongsa Ramangura, chairman of the Strategic Committee For Reconstruction, said the government should focus on implementing planned infrastructure projects worth an estimated 3 trillion baht over the next six months.

He said the government should at least sign construction contracts for some key projects, having spent 11 months planning them since assuming office. He said the government should act with haste to disburse the funds it had raised after issuing an executive decree to borrow 350 billion baht to improve irrigation and flood management in the Chao Phraya River basin.

Korn warns massive loans ripe for graft | Bangkok Post: news

Korn warns massive loans ripe for graft

• Published: 30/06/2012 at 03:37 AM
• Newspaper section: News

Democrat MP and former finance minister Korn Chatikavanij said yesterday the government should rethink its plan to raise another 2 trillion baht in loans by cabinet decree to finance infrastructure development megaprojects.


Korn: Fiscal budget sufficient

The planned additional loans could lead to problems of corruption, he said.

The government should instead use the annual fiscal budget for the funds, as it has a better monitoring system and is more transparent than a cabinet decree.

Deputy Prime Minister Kittiratt Na-Ranong announced on Thursday that the government plans to forward a bill to parliament requesting to borrow 1.6-2 trillion baht over the next six months for investment in infrastructure projects.

The money will also be used for projects including a high-speed train and dual-track railways.

Mr Korn said the cabinet had already passed a decree to raise 350 billion baht in loans citing an urgent need, but there had been no disbursement of this "urgent" budget even though six months had gone by.

He said there is no justification to issue an additional decree to seek loans because the fiscal budget is enough for infrastructure development projects.

Public Debt Management Office director-general Chagrin Parapuntakul said that outstanding public debt now accounted for 42% of GDP.

He projected the figure would be no more than 45% of GDP by year end but it might rise to about 50% next year.

The government's plan to seek 1.6 trillion baht in additional loans could raise public debt to 60% of GDP, but the public debt ratio would depend on government spending and the annual rate of economic growth, Mr Chakkrit said.

If the economy expands by 5-6% annually, the public debt ratio would be below 60% of GDP, otherwise it could be higher than that, he said.