The Fiscal Responsibility Act, which puts more restrictions on government off-budget loan-seeking legislation, should help the fiscal budget be spent more thoughtfully, says a senor official at the Finance Ministry.
"If measures or projects will add a burden to budget expenditures, responsible state agencies must conduct a management plan, set a source of funding [for repayment] and estimate the cost of revenue to propose to the cabinet," said Pornchai Thiraveja, an adviser to the Fiscal Policy Office. "A report on the comparative benefits and revenue loss [from implementing such projects] must be proposed to the cabinet at the end of every fiscal year until the projects are completed."
The act, enforced since April 20, is designed to maximise budget spending and prevent politicians in the future from repeatedly using off-budget borrowing to finance projects, particularly pork-barrel schemes. Under the act, any budget to be disbursed must have clear details and a purpose as well as an investment worthiness evaluation, he said.
The law also prevents politicians from using sin taxes to fund activities inappropriately by requiring responsible agencies to seek approval from the Finance Ministry, Mr Pornchai said.
The Fiscal Responsibility Act integrates fiscal discipline requirements appearing in the Treasury Reserves Act, Budget Procedure Act and Public Debt Management Act.
The new act also requires formation of a fiscal policy committee chaired by the prime minister that arranges a medium-term fiscal plan, setting ratios including public debt to GDP and debt payment to budget expenditure as a framework for fiscal discipline. Investment budgets must account for at least 20% of the annual budget and cannot be lower than the budget deficit, Mr Pornchai said.
