The Ministry of Finance is preparing a backup plan to sustain the economy if delays in forming a new government affect budget disbursement for the 2024 fiscal year starting on Oct 1.
The draft Budget Expenditure Act for fiscal 2024 may face a review to align with the new government’s guidelines before being proposed to parliament for approval, said Krisada Chinavicharana, the ministry’s permanent secretary.
He said the ministry expects this could cause a delay of up to six months in the budget calendar starting from Oct 1.
Consequently, Mr Krisada said, a contingency plan is needed to prevent any impact on the economy this year and next. It calls for the ministry to consult with the Budget Bureau to proceed with the spending plan for the fiscal 2023 budget.
The director of the Budget Bureau has the authority to implement this plan if the new version of the Budget Expenditure Act cannot be issued according to the schedule. However, this plan only applies to regular expenses and continuous investment projects.
Mr Krisada said that state agencies should accelerate their utilisation of budget funds at the beginning of the fiscal year (front-loading) instead of at the end as usually happens.
Specialised financial institutions are being urged to expedite the utilisation of the remaining credit lines of 70 billion baht under a soft loan programme provided to the public and entrepreneurs by the end of this year. This should help the economy in the short term, he added.
According to the draft 2024 Budget Expenditure Act prepared by the Prayut Chan-o-cha administration, budget expenditure was set at 3.35 trillion baht. Government revenue is forecast at 2.757 trillion baht, resulting in a budget deficit of 593 billion.
Pornchai Thiraveja, director-general of the Fiscal Policy Office, said the delay in the Act would represent a setback of only 0.05% of GDP because the government’s investment expenditure plan mainly falls in the last two quarters of the fiscal year.
Furthermore, in cases where the previous fiscal year’s budget has been utilised, the government has sufficient liquidity to carry out operations. As of May, the government had remaining treasury reserves of 256 billion baht.
It is expected that by the end of this fiscal year or Sept 30, the level of treasury reserves will increase to 500 billion baht.
According to Mr Pornchai, due to the delay in preparing the budget for 2024, the new government will have to prepare budgets for both 2024 and 2025 simultaneously this year.
This is because the preparation of a budget normally begins 11 months before the start of a fiscal year. So work is expected to begin on the fiscal 2025 budget in November this year.