Govt to issue benchmark bonds
THE government plans to raise more than half of the estimated Bt957.72 billion under its fund-mobilisation plan through benchmark bond issues in the next fiscal year starting next month, according to the Public Debt Management Office (PDMO).
After the annual PDMO market dialogue yesterday, aside from the planned benchmark bond issues, 28-day treasury bills will be launched every week and savings-bond issues twice a week for the government’s fundraising during fiscal 2017.
The planned benchmark bonds will have five, 10, 15, 20, 30 and 50 years maturity for Bt550 billion in total or 57 per cent of the estimated fund-mobilisation plan, as a way to boost government bonds’ liquidity and set their reference rates.
The government’s Bt957.72-billion fundraising plan consists of Bt440.66 billion in new borrowings and a Bt517.06-billion debt rollover in the next fiscal year.
Of total new borrowings, Bt390 billion will be used to offset the budget deficit, Bt50.61 billion for credit extension to state enterprises, and Bt48 million for the Natural Catastrophe Insurance Fund.
About Bt189 billion of the total rollover planned will aim for debt restructuring under the Public Debt Act, Bt313.12 billion for debt restructuring under the FIDF Act and Bt14.94 billion as credit extension for the Finance Ministry.
Under its fiscal 2017 operating plan, the PDMO will enhance the benchmark bonds’ liquidity by increasing their amount and reducing the number of auctions, while developing over-allotment and mini-auctions to lower the volatility of the government bond yield curve and absorb excess demand.
Bond stripping will also be introduced to separate the bonds’ principal from coupon rates, which will create zero-coupon bonds.
In regard to the infrastructure projects, about 15 ongoing projects starting before 2015 have seen budget disbursement of Bt20.13 billion or 41.31 per cent of the fiscal 2016 disbursement plan, as at the end of July 2016. These projects are worth a total of Bt297.15 billion.
Of 20 projects under action plans, five are under construction with total disbursement of Bt9.5 billion or 28.38 per cent of this fiscal year’s budget, as at the end of July. Seven projects are in the bidding process and eight are being proposed to the Cabinet for approval.
Also yesterday, the National Legislative Assembly (NLA) approved the drafted Bt2.73-trillion expenditure budget for fiscal 2017. The budget period will start from next month.
Deputy Prime Minister Wissanu Krua-ngam said this would be the last fiscal budget overseen by the current military-led regime, according to its “road map to democracy”.
There would then be an election and a transition period to a new civilian government under the new constitution, he said, noting that spending under the budget spending would undergo the inspection process specified by the new charter.
Other bills involving the budget expenditure will also be proposed to the NLA soon. These include bills on procurement, budget procedure and fiscal responsibility.
