By ERICH PARPART
THAILAND needs a fiscal responsibility law that will create transparency in government budget processes and the management of public resources, in order to remove the temptation to use populist policies that serve nothing but political means and corruptio
“We need this law to tackle the problem of populist policies, which have been widely used in the past,” Sommai Phasee said at a Finance Ministry seminar on preparations for the implementation of such a law.
Ekniti Nitithanprapas, deputy director-general of the Fiscal Policy Office (FPO), said the use of fiscal policy was increasingly complicated since it could be used via many agencies outside of central government, such as through specialised financial institutions and state enterprises subject to less regulatory oversight.
The proposed fiscal responsibility law would, therefore, allow the government to regulate the use of the fiscal budget by all public agencies, he said.
He told the seminar that the draft law would be presented to the Cabinet in the coming months, and then to the National Legislative Assembly within six months.
Wimol Chatameena, the FPO’s executive director, said the new law would cover the use of fiscal policy by all government agencies, and would include a mid-term plan to provide better guidance for the direction of fiscal policy by future governments.
Current law only covers short- and long-term fiscal plans, she said.
Wimol said the new law would manage all stages of government projects in order to reduce debt risk; regulate earmarked tax to prevent the inefficient use of the tax; improve the regulations for producing government agencies’ annual budgets; increase regulations regarding government loans; and introduce the use of a government report on fiscal risk with a view to increasing transparency.
Meanwhile, the finance minister said he believed the central budget should be reallocated so that there was a reserve fund within it that could only be used for assisting the poor in tough economic times.
In every fiscal year, there is a central budget which the prime minister can authorise for use as a remedy for people affected by natural disasters and other unpredictable situations, but there is no specification regarding help for those affected by domestic or global economic situations, such as falling crop prices, said Sommai.
“I personally believe that a central budget worth around Bt100 billion should be set up in every fiscal budget year to be used as a reserve fund that can only be used to help the poor who are affected by volatility in the economic situation.
“ If it is not enough, then the government can borrow from a government agency such as the BAAC [Bank for Agriculture and Agricultural Cooperatives], but it would have to pay it back in the next fiscal year,” he said.
“If we do not have this kind of budget, then every time there is a disaster we have to go and borrow from the banks, which is bad for the government’s financial discipline,” he added.
The military-led government asked the BAAC to front its Bt40-billion subsidy for rice farmers affected by falling global prices last year, and Sommai said the Finance Ministry had already set aside a budget to compensate for the borrowed amount in the 2016 fiscal year, which commences in October.
The minister said his office was currently in discussions about a proposed reserve within the central budget to specifically help the poor affected by volatile economic situations and, if it is approved by the government, the idea could be to put into use for the next fiscal year.