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Thailand plans bigger 2009/10 budget deficit-source

Published: 16 Feb 2009 00:52:38 PST

BANGKOK, Feb 16 - Thailand plans a bigger budget deficit of about 4 percent of gross domestic product in fiscal 2009/2010 as the government spends more to boost economic growth, a government official said on Monday.

The budget plan for the fiscal year starting Oct. 1 projects 1.9 trillion baht ($54 billion) in state spending, which could help the economy expand around 3 percent in calendar 2010, the official told Reuters, declining to be named.

The cabinet will review the budget plans on Tuesday.

These project revenue of 1.51 trillion baht in 2009/2010, the source said. That would give a budget deficit of 390 billion baht, about 4 percent of 2010 GDP, compared with a projected 350 billion baht deficit this year, some 3.5 percent of GDP.

The government originally planned a deficit of about 250 billion baht for the current year but decided to increase that by 100 billion baht and boost spending in an attempt to ward off recession caused by the global economic slump.

The government has introduced a series of measures including tax breaks and cheaper utilities, and Finance Minister Korn Chatikavanij has said that should ensure economic growth of 2 percent this year, against an estimated 3.6 percent last year.

On Monday Prime Minister Abhisit Vejjajiva told an economics seminar the economy was likely to show signs of recovery in the second quarter of this year thanks to government spending and other measures planned for later this year.

"After government spending, I believe growth may be a little negative or may not be negative in the second quarter," he said.

He said the economy would shrink in the first quarter of this year after a 3 percent contraction forecast for the final quarter of 2008 compared with a year earlier.

The state planning agency is due to release fourth-quarter GDP data on Feb. 23.

Abhisit said the government's aim was to keep growth positive, alleviate job losses, prevent the economic crisis from causing social problems and maintain political stability. ($1=35.15 Baht)