Korn questions Govt's borrowing
The government plans to borrow more than Bt1 trillion, but does not have a clear plan on how to spend such a huge amount, former finance minister Korn Chatikavanij said during the parliamentary debate on the two executive decrees yesterday.
Korn, a Democrat MP, demanded details of the government’s Bt35-billion spending plan to prevent another flood disaster.
"We will support the decree if the government has a clear plan," said Korn, referring to the executive decree authorising the Finance Ministry to borrow Bt350 billion.
He said the government planned to borrow more than Bt1 trillion over the next few years. Apart from the Bt350 billion under the decree, it plans to run a fiscal deficit of Bt400 billion for the current fiscal year and Bt300 billion for the next year. And it plans to borrow Bt50 billion to finance an insurance scheme.
Korn accused the government of depriving lawmakers of the right to scrutinise the proposed bills by issuing an emergency decree to borrow Bt350 billion, which cut short the lawmaking procedure via Parliament.
Though the Constitution Court has approved the two executive decrees, lawmakers have the right to question the appropriateness of enforcing such decrees, he said.
Korn also warned that the decree transferring public debt of Bt1.14 trillion to the Bank of Thailand would compromise the public interest.
As the central bank will collect 0.47 per cent of deposits from both commercial and state-run banks, banks will pass that cost on to depositors, he said.
The debt payment will also weaken the Deposit Protection Agency, as the central bank will direct a substantial part of its fund for debt payment. The DPA currently has accumulated funds collected from commercial banks amounting at Bt90 billion, but the agency needs to have at least Bt200 billion, he said.
He also raised concerns of depositors not being adequately protected by the DPA in case of a run on the banks. The DPA, from August onwards, will provide protection of Bt1 million per bank account per bank.
Currently, 59 million bank accounts have combined deposits amounting to Bt2.6 trillion out of a total deposit base of Bt7.5 trillion. The average account holds less than Bt50,000, according to Korn. So under the DPA law, the agency has to protect these 59 million accounts, but it has funding of only Bt90 billion currently.
He said he did not agree with the government plan to collect 0.47 per cent of deposit base from state-run banks, as these institutions have to provide soft loans for low-income people while commercial banks face no such requirement. The government has cited creating a level playing field as the reason for collecting fees from state-run banks.
Korn said he was doubtful of transparency in the use of fees collected from state-run banks, as the government would not be using these monies for debt payment. It plans to set up a national development fund financed by fees collected from state-run banks.
Deputy Prime Minister Chalerm Yoobamrung said the government would reveal today details of the water-resources management projects.
