Finance Ministry looks for budget stopgap.

The Finance Ministry is considering the possibility of borrowing under the Public Debt Management Act to finance new state investment projects in case the 3.2-trillion-baht budget expenditure for fiscal 2020 hits further snags.

Solutions to push public investment to boost the country’s economic growth are crucial amid the export slowdown, as the state investment budget is quite high at 600 billion baht this fiscal year, said an informed source at the Finance Ministry.

According to Section 22 of the Public Debt Management Act, the Public Debt Management Office is authorised to secure loans from the local and overseas market in the event that extra budget or the country’s financial security needs to be strengthened for social and economic development. The state agency’s borrowing is capped at 10% for that eventuality.

Such borrowing must be disbursed to state projects, investment for which is ready to start. Under the Fiscal Responsibility Act, these projects must be worthwhile.

The act, which has been enforced since April 2018, is designed to maximise budget spending and prevent politicians from repeatedly using off-budget borrowing to finance projects. According to the act, payment liabilities incurred from spending on the election manifesto are capped at 30% of annual budget expenditure, the government’s debt liabilities are capped at 35% of estimated revenue for that fiscal year, and the government must allocate 2.5-3.5% of annual budget for principal debt repayment.

Foreign-denominated public debt must not exceed 10% of overall public debt and 5% of exports and services.

The fiscal 2020 budget is at risk of further delay after several MPs requested a Constitutional Court ruling on the bill’s validity, alleging that some lawmakers’ ID cards were used during the vote in the lower chamber while the legislators themselves were absent.

Submitting the budget bill for royal endorsement will have to wait until the court’s ruling. The budget is estimated to face a two-month delay into May.

The annual budget bill was due to start on Oct 1, 2019 but has been in limbo throughout the lengthy government installation and legislative process.

Finance Minister Uttama Savanayana said recently that a government shutdown would not occur, as officials can keep spending to fund pay cheques and existing projects until the bill becomes law.

Budget Bureau director Dechapiwat Na Songkhla has said the office is set to seek permission to raise the ceiling of the fiscal 2019 budget to 75% from the 50% that is expected to be depleted by March.