Thailand to boost govt spending, deficit to jump

Thailand to boost govt spending, deficit to jump
Wed, Oct 29 2008


BANGKOK, Oct 29 (Reuters) - The Thai government is to boost spending to support economic growth, under threat from the credit crisis, pushing the 2008/09 budget gap up to about 350 billion baht ($10 billion), the finance minister said on Wednesday.

The new plan for the fiscal year that started on Oct. 1 means 1.94 trillion baht of state spending and a deficit of 349.5 billion baht, or 3.5 percent of nominal 2009 gross domestic product, up from 2.4 percent under the orginal budget.

"We'll increase the budget by another 100 billion baht to help the poor with spending and to create more jobs," Suchart Thada-Thamrongvech told reporters.

The deficit will be financed by bond issues and other borrowing, and may be helped by some debt restructuring.

For fiscal 2007/08, the government expected a 165 billion baht deficit, or 1.75 percent of GDP. It normally hopes to limit the deficit to 2.5 percent of GDP.

"The bigger budget is needed as we have an emergency situation. The economy and exports are slowing and private investment is sluggish," Suchart said. "We need to boost spending and create jobs."

Last week Suchart said the economy would probably grow less than 4 percent next year after about 5 percent this year and 4.8 percent in 2007.

On Monday, the Federation of Thai Industries said the global economic crisis could cost a million jobs early next year and output woul be slashed sharply.

That would make it difficult for new entrants to the workforce -- about 700,000 each year -- to find jobs, it said.

The workforce in Thailand numbers 20 million, most in agriculture but around 5.7 million in non-agricultural jobs.

($1=34.8 Baht)

(Reporting by Trisanat Kongkhunthian; Writing by Orathai Sriring; Editing by Alan Raybould)

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