N: Deficit of as much as Bt200 bn foreseen
Deficit of as much as Bt200 bn foreseen
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The Kasikorn Research Centre (KResearch) predicts the budget for this fiscal year will show a deficit of Bt170 billion to Bt200 billion, because of the economic slow-down and the possibility that the government will apply fiscal policy to boost the economy.
KResearch suggested interest-rate cuts and budget disbursements would help lift confidence in the private sector.
The research revealed the economic slow-down would affect the collection of both corporate income tax and value-added tax, resulting in tax collections falling short of the target.
Consequently, the government will face a budget deficit of Bt170 billion to Bt200 billion, or 2.1-2.4 per cent of gross domestic product (GDP), compared with Bt55 billion, or 0.7 per cent, of GDP last year.
However, the budget deficit may be lower than the forecast, because Bt85 billion will be deducted to compensate for, or repay, the outstanding debts resulting from the previous government's operations. Therefore, the net budget deficit is expected to be Bt88 billion to Bt116 billion. This is nevertheless higher than the budget deficit in fiscal 2006, which was Bt33 billion to Bt61 billion, and is a positive factor for the economy.
KResearch said the government's fiscal policy suited the current economic circumstances, but eventually the private sector will be the key to driving the economy.
Existing monetary and fiscal policies appear favourable for boosting the private sector's confidence.
"Interest rates should be decreased. Budget disbursements should be accelerated," KResearch declared.
However, it warned that the authorities should be careful about signalling any policies, including the Foreign Business Act, the Retail Business Act, capital controls and baht stabilisation.
Internal political uncertainty and government policies are the main issues concerning the private sector, it said, quoting several confidence surveys. The key issues the private sector is looking at include the constitution drafting, the next general election and a stable government, which will lead to a clearer picture of management policy to direct the Thai economy in the future.
