This presentation was made by Mutita Somana, Thailand, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018
1. 1
Mutita Somana
Budget Bureau, Thailand
For 14th OECD Asian SBO Meeting,
Bangkok, Thailand
December 13-14, 2018
Recent Development of
the Thai Budgeting System
Budget Bureau
2. Presentation Outline
Fiscal Responsibility Act B.E. 2561 (2018)
New Budget Procedure Act B.E. 2561 (2018)
Expanded Role for the Budget Bureau
Linkages between the National Strategy, MTEF and
Budget Preparation
Budgeting Challenges
2
4. Rationale & Expected Results
Constitution: Section 62
State must strictly keep fiscal discipline
for fiscal stability and sustainability under
a fiscal responsibility law.
No specific legal framework for
fiscal responsibility in place
Fiscal Innovation
Lack of Comprehensive Fiscal
Situations
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Rationale
Fiscal discipline
Guidelines for
agencies
Discipline on fiscal
innovation
Comprehensive
Fiscal Reports &
Analytics
Expected Results
5. 87 Sections : 5 General Sections + 5 Chapters (75 Sections) +
Transitory Provisions (7 Sections)
5
FRA Structure
General SectionsChapter 1
Fiscal and Financial Policies
- State Fiscal and Financial Policy Commission
- Financial & Budgetary Proceedings
Fiscal and Financial Disciplines
Revenues Expenditures
Acquisition of Assets and Public Asset Management
Debt Financing and Debt Management
Non-Budgetary Funds and Revolving Funds
Local Finance
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Transitory Provisions
Accounting, Reporting, and Checks
State Audit
- MTFF within 90 days after FRA effective
- Public accounting and financial reports
- Criteria and qualification of Agency public accountant
Chapter 4
6. Committee
Key Provisions: Fiscal Policy Committee
Committee Secretariat
Lay down additional fiscal disciplines
Prepare and revise Medium-Term Fiscal Framework (MTFF)
Suggest directions for solving problems regarding budgeting, revenue collection, public debt
management and asset management
Set numerical limits on the contingency fund/debt repayment/Multi-year commitment budget/additional
multi-year commitment budget committed during the fiscal year/debt management framework
Set out a limit on the compensation rate for expenses or revenue loss from quasi-activities (Section 28)
Lay down policies on, and supervise, financial riskmanagement
Set out reporting criteria for public debts and fiscal risks
Duties&Powers
Chairman - Prime Minister
Deputy Chairman – Finance Minister
MoF BB NESDB BoT FPO
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7. Serves as the principal master plan for
fiscal planning, budget expenditure
preparation, public debt management
Components:
- Financial objectives and policies
- Economic status and estimates
- Fiscal status and estimates including
forecasts of revenue, expenditure,
fiscal balances
- Public debt status
- Fiscal obligations of the Government
Medium-Term Fiscal Framework (MTFF)
(S.13)
Fiscal Policy Committee
Approved
0
MTFF
Adoption
Council of Ministers approves
MTFF within 3 months after the
end of FY
Duration no less than 3 years
Agencies takes
into consideration
for their Revenue
Collection or
generate earnings,
budget
preparation and
Debt financing
Preparation of
the Annual
Budget
Expenditure
Key Provisions: FRA vs Budgeting Linkages
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8. 8
Necessity and Missions
Status of expendable non-budgetary funds
Ability to spend and commit the budget in the FY
Independently perform duties of Parliamentary
units/Courts/Independent organizations/State Attorney
For LAOs, Income-earning ability / appropriateness
and differences among LAOs
Section17: Considerations in Budget
Appropriations to Public Agencies
Indication of sources and estimates of revenues,
outcomes or benefits expected from budget spending
Conformity with the National Strategy and other
development plans
Section 19: Proposal of Annual Budget
Expenditure Bill
Section 20: Annual Budget Rules
Capital Expenditures must account for no less than 20%
of the annual budget and must not be less than the FY
Budget Deficit;
Appropriations for Public Sector Personnel and their
associated welfare must be sufficiently allocated;
Appropriations for debt repayment must be sufficiently
allocated for principal repayment, interests and borrowing
expenses;
Any financial obligations required contribution /
compensation from the budget must be allocated within
a certain period stipulated by law;
Financial obligations arisen from quasi-activities must be
allocated at the earliest opportunity;
Contingency Fund for emergency or necessity shall be
budgeted only for the purposes of preventing or
remedying serious situations or with utmost urgency at
a proportion determined by the Fiscal Policy Committee.
Key Provisions: FRA vs Budgeting Linkages
9. 9
Rationale for Supplementary Budget must be well-
defined and at absolute necessity to spend
additional money during the current FY and not
the next
Sources of funds for the supplementary budget
must be clearly specified
S.21: Supplementary Budget
Appropriations with respect to the Central Fund shall be
allocated only in the case where budget expenditure items
are not or should not be allocated to individual agencies.
S.22: Central Fund
S. 24: Transfer of Budget Appropriations
Transfer of budget appropriations between public
agencies are not permitted unless stipulated otherwise
by law.
Key Provisions: FRA vs Budgeting Linkages
10. 10
Fiscal Rules
FRA: Section 11(4) FRA: Section 50
Determines ratios as guidance for
public debt management as follows:Contingency fund for emergencies
or immediate needs = 2.0 - 3.5%
Principal Repayment of public-
sector debts = 2.5 - 3.5%
New multi-year commitment budget
≤ 10% (in Annual Budget Law)
Multi-year commitments during
the FY ≤ 5%
Compensation for expenses or
revenue loss of incomes arisen from
quasi-activities ≤ 30%
Government’s debt obligations to
Annual Revenue Estimate ≤ 35%
Foreign-currency Public Debts to
Total Public Debts ≤ 10%
Public Debts to GDP ≤ 60%
FRA: Section 28 Foreign-currency public debt
obligations to revenues from exports
of goods and services ≤ 5%
12. 12
Rationale & Expected Results
Section 6 of BPA: Prescribes that the planning, executing, controlling,
monitoring, and evaluating the budget shall be pursued in accordance with
this Act and FRA
Comprehensiveness Accountability
Efficiency Effectiveness
Expected Results
Rationale “to improve the overall
budget management to be
more result-oriented,
efficient, and effective”
13. Emphasis will be given on outcome achievements or benefits derived from budget
spending while spending coverage will also consider other sources of funds.
Medium Term Expenditure Framework (MTEF) will be emphasized and
prepared for at least three years ahead (in line with MTFF under FRA)
Ministers and head of agencies receiving the budget are now required to
oversee, monitor, and evaluate the spending to improve spending
accountability
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BPA Key Features
14. Local administrative organizations (LAOs) will become direct budget
recipients.
Public Sector Personnel Program is separately classified while Transfer of
alloted budgets among agencies under the same integrated program is now
permitted
Agencies can no longer carry over their budget to the following fiscal year
unless an obligation has been committed by the end of the fiscal year.
Budget monitoring and evaluation systems will be provided for pre-allocation,
ongoing , and post-spending reviews
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BPA Key Features
15. Redefine and
strengthen the BB’s
existing role
Outcome-oriented
Control
Shifting focus from input
control to supervising
spending outcomes
Comprehensive M&E
More systematic
evaluation: pre-, ongoing,
post-evaluation
Expanded Coverage
Considering all sources
of funds, budgetary and
non-budgetary in budget
preparation
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BB’s Role Changes
17. The 20-year National Strategy
Action Plans:
Sector / Ministry Expenditure Estimates
Function Area Agenda
Government
Government Policy
Gov’t Policy
Action Plans
Put into Practice
/ Implementation
Linkages between the National Strategy, MTEF and Budget Preparation Processes
Master Plans under the National Strategy
Year 1 - 5 Year 6 - 10 Year 11 - 15 Year 16 - 20
12th National
Economic and Social
Development Plan
National
Security Plan
Country
Reform Plan
National
Security Plan
13th
NESDP
Country
Reform Plan
National
Security Plan
14th
NESDP
Country
Reform Plan
National
Security Plan
15th
NESDP
Country
Reform Plan
FY2020 Budget Allocation Strategy
National
Security
Human
CapitalCompetitiveness
Inequality
Reduction
Natural
Resources
Public
Administration
Long-term Expenditure Framework (LTEF) 20 Years
MTEF 1 MTEF 2 MTEF 4MTEF 3
6 Budget Allocation Strategies + 1 Item for General Administration
Basic Programs
Strategic Programs
General Public
Administration
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19. Budgeting Challenges
Fiscal Responsibility Act
Increased burden to agencies
Fiscal Limit checks on some rules
Some challenges to keep the fiscal rules
New Budget Procedure Act
Efforts required to ensure understanding of parties involved and preparation of
supporting information systems;
Expected volume of work as 7,851 local administrative organizations becomes
direct budget recipients;
Full-scale monitoring and evaluation
Collection of other sources of revenue from agencies
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