Thailand's parliament approved on Saturday the budget for 2009/10 with a lower fiscal deficit than the current year, although some stimulus spending to help the economy has been kept out of the fiscal calculation. The 1.7 trillion baht ($50 billion) budget bill, proposed by Prime Minister Abhisit Vejjajiva, is about 13 percent lower than the current year's budget.
The planned deficit for 2009/10 (October-September) will amount to about 3.8 percent of gross domestic product, versus over 5 percent this year. It is expected to clear the final legislative hurdle in September. The government says some 252 billion baht of stimulus spending, that the government says is vital to help pull the economy out of its worst recession in 11 years, is being kept outside the formal budget so that legal limits on the deficit will not be breached.
The Bank of Thailand has forecast the economy would contract 3.0-4.5 percent this year, the weakest performance since the 1998 Asian financial crisis, before growing 3.0-5.0 percent in 2010. The emerged from recession in the second quarter, growing 2.3 percent from the first, but political risk and weak global demand could impede recovery, according to the state planning agency.
Abhisit's coalition, which took office in December, won parliamentary approval in July for 800 billion baht of borrowing to help finance a 1.43 trillion baht stimulus package and fiscal deficits over the next three years. Finance Minister Korn Chatikavanij has said 800 billion will be raised locally, either through government bonds or loans from commercial banks.
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