FPO to push draft law on state monetary, fiscal issues

Krisada Chinavicharana, director-general of the FPO, yesterday said that relevant parties would be invited for discussion on the already-drafted law, which would then be forwarded to the Finance Ministry, and later to the Cabinet.

In the draft law, a ceiling for state expenditure is set under monetary and fiscal disciplines, including a public-debt ceiling at no more than 60 per cent of gross domestic product, and a definition of spending for populist projects. The law will be launched for specific budget-spending cases.

"FPO officials have been assigned to add more details, which will help keep the government’s spending in check in regard to fiscal and monetary discipline," he said.

The legal draft contains background defining principles for financial planning in the medium term, revenue collection, direction of the national expenditure budget, financial management, accounting, public funds, indebtedness and contingency funds.

The first of the two sections covers the state’s fiscal and monetary discipline, and the second covers the state’s accounting, reporting and inspection.

In the first section, expenditure budgeting is required to take into account the country’s economic situation, budget policy, necessities, capabilities for spending or debt obligations, state revenue collection, public debts and borrowings for the budget deficit. Meanwhile, the public-debt level has to be no more than 60 per cent of GDP. However, if necessary, the finance minister is allowed to set a new ceiling, although the treasury balance will have to remain at the necessary level for public agencies’ disbursement.

Off-budget expenditure will only be for the performance of duties and, if public agencies have such a budget, it has to be deposited at the Finance Ministry.

The second section allows the ministry to set state accounting standards and policy, with the reporting of revenue, expenditures, debt obligations, borrowings, and asset and financial management, among other things.

Public agencies, excluding state enterprises, will have to follow these standards and policy.

The finance minister also has to present an annual budget report to the Cabinet within 90 days from the end of a fiscal year, and to Parliament within 120 days.

Under the legal draft, the Finance Ministry is also required to report fiscal risks and the direction for risk management on a yearly basis.

Risk assessments from impacts to the macroeconomy, the government’s financial policy system and the operating performance of public agencies, state enterprises and local administrative organisations that could burden the government’s fiscal stance must be included in the report, which will be submitted to the Cabinet within 90 days from the end of a fiscal year.