Download ESCAP High-level Policy Dialogue

 ESCAP High-level Policy Dialogue
Ministry of Finance of the Republic of Indonesia International Economic Summit 2013
Eleventh Bank Indonesia Annual International Seminar
“Macroeconomic Policies for Sustainable Growth with Equity in East Asia”
15-17 May 2013, Yogyakarta, Indonesia
Jointly organized by
UN ESCAP, Ministry of Finance of the Republic of Indonesia and Bank Indonesia
Session 3 – Fiscal Policy for Development and its Budgetary Implications
Presentation
The Experience of Thailand
by
Ekniti Nitithanprapas
Deputy Director General, Fiscal Policy Office, Ministry of Finance, Thailand
May 2013
The views expressed in the paper are those of the author(s) and should not necessarily be considered as reflecting the
views or carrying the endorsement of the United Nations. This paper has been issued without formal editing.
Session 3 - Fiscal Policy for Development and
its Budgetary Implications:
The Experience of Thailand
Dr. Ekniti Nitithanprapas
Deputy Director-General
Fiscal Policy Office
Ministry of Finance
1
15 May 2013
Outline
1. Short-term Fiscal Policy to stimulate
domestic demand
2. Medium-term Fiscal Strategies
3. Medium-term Fiscal Sustainability
Ministry of Finance, Thailand
2
1. Short-term Fiscal Policy
Thailand encountered major economic shocks in recent years
10
7.8
8
6.4
6
2011
Flood in Thailand;
Global Economic
Slowdown
2009
U.S. Sub-prime crisis
4
2.5
2
0.1
0
-2
-2.3
-4
2008
Ministry of Finance, Thailand
2009
2010
2011
2012
3
1. Short-term Fiscal Policy
Counter-cyclical fiscal policy is needed to deal with economic shocks
Real Public Consumption
%
8
100000
2
6
0
-100000
-0.9
-2
-0.9
-1.6
-300000
-2.6
-2.4
2
7.4
-4
-500000
-6
-5.8
Budgetary Balance (mil. Baht)
-8
2007
2008
2009
2010
2011
2012 2013F
2008
2551
2009
2552
2010
2553
2011
2554
2012
2555
2013f
2556f
Real Public Investment
%
18
% of GDP
-700000
3.5
3.2
1.1
0
-3.4
2006
7.5
6.4
-0.7
2005
(3.0-4.0)
4
0.3
(13.2-15.2)
13
8
14.2
8.9
3
2.7
-2
-7
-2.2
-8.7
-4.7
-12
2008
2551
2009
2552
2010
2553
2011 2555
2012 2556f
2013f
2554
4
2. Medium-term Fiscal Strategies
Maintain Public Debt
level under the Fiscal
Sustainability
Framework
Promoting Inclusive
Growth
Improvement in
Infrastructure and
Logistic System
Ministry of Finance, Thailand
5
2.1 Enhancing Competitiveness
Thailand needs to enhance its competitiveness in medium-term.
Thailand's Competitiveness Ranking
Thailand’s Competitiveness Score
28
Institutions
6
Innovation
5
Infrastructure
4
34
Business
sophistication
36
Macroeconomic
Environment
3
2
38
39
38
1
Health and
primary
education
0
Market size
Higher
education
and training
Technologica
l readiness
Financial
market
development
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
131
Countries
134
Countries
139
Countries
139
Countries
142
Countries
144
Countries
Goods
market
efficiency
Labor market
efficiency
Thailand
ASEAN-5
Source: World Economic Forum, 2012-13
6
2.1 Enhancing Competitiveness
Domestic investment has been low since 1997 crisis
45
Investment to GDP Ratio (Percent)
42.5
Capital Expenditure to Total Expenditure (Percent)
38.8
Public Investment
Private Investment
35
25
32.1
21.5
18.4
15
16.8
5
10.4
Ministry of Finance, Thailand
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
-5
1996
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
4.7
7
2.1 Enhancing Competitiveness
The 2 investment plans will help improve Thailand’s logistics system and
enhance competitiveness.
Water Resource
Management Program
(from 2013-2018)
Infrastructure
Investment Program
(from 2013-2019)
Budget: 350 bn THB (around 12 bn USD)
Budget: 2.0 tn THB (around 66.7 bn USD)
Purpose:
build water-management
infrastructures required for flood
protection and for irrigation purposes
Benefits:
o Better irrigation
o Better protection against drought
and flood
Purpose:
strengthen the country’s manufacturing
and logistics competitiveness
Benefits:
o Create economic activities in term of
trade, investment, and tourism
o Network ASEAN for the benefit of
local and regional economy
o Reduce logistics cost
o Reduce fuel consumption
o Enhance country's competitiveness
Ministry of Finance, Thailand
8
2.2 Narrowing Inequality Gap
Thailand still has significant income disparity
Income distribution in Thailand (1994-2009)
Income bracket
Income share (%)
1994
1996
1998
2000
2002
2004
2006
2007
2009
4.07
4.18
4.30
3.95
4.23
4.54
4.03
4.41
4.79
2nd Quintile
7.35
7.55
7.75
7.27
7.72
8.04
7.69
8.04
8.36
3rd Quintile
11.67
11.83
12.00
11.50
12.07
12.41
12.13
12.42
12.57
4th Quintile
19.68
19.91
19.82
19.83
20.07
20.16
20.04
20.20
20.08
5th Quintile (Highest income)
57.23
56.53
56.13
57.45
55.91
54.86
56.11
54.93
54.19
Total income share
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
14.07
13.52
13.06
14.55
13.23
12.10
13.92
12.47
11.31
1st Quintile (Lowest income)
5th Quintile/1st Quintile (times)
Ministry of Finance, Thailand
2.2 Narrowing Inequality Gap
Achieving inclusive growth through various fiscal instruments
Tax policy
- Property tax reform
- Negative income tax
- National pension reform
Inclusive growth
Expenditure policy
- Decentralization
- SML and Village Funds
- Student Loan Fund
- Microfinance Master Plan
Quasi-fiscal policy
- SME promotion
- Financial literacy
Ministry of Finance, Thailand
10
3. Medium-term Fiscal Sustainability
Fiscal rules in Thailand
X% of Budgetary Expenditure
X% of Principal Repayment
FY2013 Budget Expenditure =
2,400,000 Million Baht
FY2013 Principal Repayment =
24,604 Million Baht
A. 20% to finance budget deficit
(480,000 Million Baht)
A. 80% to finance budget deficit
(19,683 Million Baht)
B. 20% to guarantee and on-lending
to state enterprises in Baht
(480,000 Million Baht)
C. 10% to finance economic and
social development and on-lending
to state enterprises in foreign
currency
(240,000 Million Baht)
Ministry of Finance, Thailand
Part
Government
พรบ. สำหรับโครงกำรไทยเข้
มแข็
borrowing
limitง
Government
borrowing plan
Remaining
resource
A
499,683.0
300,000.0
199,683.0
B
480,000.0
400,829.9
79,170.1
C หนี ้สำธำรณะ
240,000.0
เงินกู้ปกติ พรบ.
Total
1,219,683.0
700,829.9
240,000.0
518,853.1
11
3. Medium-term Fiscal Sustainability
Under Fiscal Sustainability Framework, public debt to GDP will not exceed 60 percent.
Public debt ratio
External debt ratio
70
61
62
61
fiscal sustainability framework
60
57
48
50
50
52
51
Total Public Debt to GDP
40
45
51
45
43
42
43
36
40
37
30
12
13
11
9
7
5
4
4
4
3
3
2012
16
2011
External Public Debt to GDP
2010
6
9
19
2009
10
15
20
2008
20
2007
21
2020
2019
2018
2017
2016
2015
2014
2013
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
Source: PDMO as of 25 March 2013
Ministry of Finance, Thailand
12
Thank You
Ministry of Finance, Thailand
13