Legal doubt over bt2-tln lending bill

The government’s Bt2-trillion borrowing bill for infrastructure and transport projects may face a fate similar to the Bt350-billion water management scheme – as a law reform panel said yesterday the bill may contravene the charter.
The Law Reform Commission of Thailand (LRCT), headed by former attorney general Kanit Na-Nakhon, said the Bt2-trillion bill was likely to violate Article 169 of the Constitution.
It follows a ruling last week by the Central Administrative Court, ordered a halt to the Bt350-billion water scheme, saying the government must conduct environmental impact assessments (EIAs) and Health Equity Impact Assessments (HEIAs) before signing deals with construction companies.
The Law Reform Commission was set up by the Abhisit government. Kanit told a press conference yesterday it reviewed the Bt2-trillion borrowing bill, gathered opinions from all sectors and made recommendations to Prime Minister Yingluck Shinawatra on Tuesday.
Kanit said the commission found that the bill would violate Article 169 of the charter because the government was permitted to pay state funds under the authority of only four laws – and none of them was appropriate for loans totalling Bt2-trillion.
Article 169 says in part “the payment of State funds shall be made only when it has been authorised by the law on appropriations, the law on budgetary procedure, the law on transfer of appropriations or the law on treasury balance, except that it may be prepaid in the case of urgent necessity under the rules and procedures provided by the law”.
The bill, approved by the House in its first reading, seeks to enable the Finance Ministry to borrow Bt2 trillion off-budget for spending on transport infrastructure projects.
Kanit said since the borrowing would be under the responsibility of the Finance Ministry, the loans would be regarded as state funds and spending the loans would have to comply with the Constitution.
“As a result, enacting a bill by using other ways apart from what is established by the charter, could be unconstitutional.” He said a bill’s enactment must also be based on the principle of appropriateness and must not restrict public participation and the people’s rights.
Kanit said the bill would deprive the legislative branch of power to check the spending of the executive branch for up to seven years. The loans would also be legally binding on future governments and would deprive them of their rights to reject projects or propose new ones – because all projects would have been determined already by the current government.
He also voiced concern that projects listed in the annex of the bill had been subject to feasibility studies. If they were later delayed or aborted, they could be worthless as investments, and cause a national financial crisis.
Kanit said the government could opt for legal investment methods, such as allowing private firms to jointly invest in the transport projects.
Despite this, the government plans to go ahead with the bill’s enactment and proceed with the projects, according to Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong.
Kittiratt said Yingluck told the council of economic ministers that all state agencies concerned must get ready to start the projects once the bill clears Parliament.
Kittiratt said vetting of the bill by a special House committee had progressed and any funds trimmed from the proposed projects would be used for promotion and development of the country.
The government would set aside one per cent of loans, or about Bt20 billion, for development purposes, Kittiratt said.
Transport Minister Chadchart Sittipunt said the prime minister instructed government agencies to ensure transparency in the projects.
Chadchart said the Transport Ministry would invite the private sector to observe the bidding.
He said Yingluck also suggested there should be “added value” in the projects. For example, there should be projects like new cities or economic zones along high-speed railway lines.
“We have no worry that the projects may face lawsuits [like the] water management scheme because all of the transport projects will be implemented in line with the rules and with prudence,” Chadchart said.
Speaking before leaving to visit Poland and Turkey, Yingluck said she had assigned Deputy Prime Minister Phongthep Thepkanchana to hold meetings with state agencies concerned to study what should be done next following the Administrative Court’s ruling.