The economy will freeze if the political strife continues for another three months and the fiscal-2015 budget cannot be done, warns the Center for International Trade Studies of the University of the Thai Chamber of Commerce (UTCC).
“Without the fiscal-2015 budget approval, government investment in several projects will have to be suspended and the impact on the labour market is expected to become worse,” said Aat Pisanwanich, the centre’s director.
The political impasse not only affects Thailand’s economic prospects but also the competitiveness of Thai businesses, Mr Aat said, adding if the stalemate lasts for another three months and turns more violent, small and medium-sized enterprises will be hit hard, with as many as 800,000 out of a total 2.5 million going out of business.
According to UTCC’s latest study on Thailand’s competitiveness in Asean and its three key trade partners (China, Japan and South Korea), Thailand has lost share in the three markets worth as much as 183.12 billion baht over the last five years to other Asean members.
Further losses are anticipated this year mainly in sectors like rice, crude palm oil, apparel and electrical appliances.
However, the Budget Bureau has issued assurances that the fiscal-2015 budget will be ready to seek approval from the new government if the general election scheduled for July is a success.
Director Somsak Chotrattanasiri said his agency’s budget planning for fiscal 2015 is 70% complete and includes three main parts: fixed costs such as salaries and operating expenses; cabinet-approved projects; and preliminary state expenditure such as road maintenance costs.
The rest has yet to be finalised and involves strategic development, for which a functioning government is needed to design policies and approve plans before making funding decisions.
Mr Somsak said if the election occurs in July as proposed by the caretaker government, the annual expenditure budget for 2015 can begin on March 30 next year — a six-month delay.
Under the new budget, the deficit is set at 200 billion baht. But the government can raise the expenditure budget in the middle of the fiscal year if revenue is higher than targeted.
The annual expenditure budget for fiscal 2014 ending Sept 30 has been 56.8% disbursed, slightly lower than for the same period last fiscal year (58%), owing to the closure of the Finance Ministry for 10 days by the People’s Democratic Reform Committee.
To date the investment budget has been 36.1% disbursed to the tune of 441 billion baht, a negligible rise from last year’s 36%.
Of the 234 billion baht in expenditure budget carried over from 2013, 59% has been disbursed this year.