Bangkok: Transforming Thailand's fiscal system towards sustainability, highlighting the policy ideas of a new generation of civil servants, aiming for a budget deficit close to 3.0%.

According to Thai News Agency, Deputy Prime Minister and Minister of Finance, Mr. Pichai Chunhavajira, delivered a keynote address at the Fiscal Transformation event. Amidst both domestic and international challenges, the government needs to rebalance the country by prioritizing fiscal rebalancing, focusing on improving public revenue collection by adjusting the tax structure to align with changing circumstances and generating revenue from state assets. This also emphasizes the cost-effective and appropriate use of budgets, both regular and investment.

Economic rebalancing focuses on structural economic reform through public and private sector investment. This approach encompasses comprehensive infrastructure development, ease of doing business, and attracting foreign direct investment that fosters the development of industries using domestic production factors. Future expansion in overall investment contributes to robust economic growth, reducing the budget deficit to near 3.0 percent of GDP. This results in a stable public debt-to-GDP ratio, contributing to increased fiscal space for economic and social development and mitigating potential future risks.

For the presentation of academic work by FPO officials on 'Fiscal Transformation: Mastering Risks to Secure the Future, Decoding Risks into Lessons for Success,' Mr. Nawapol Pinyo-anantaphong, Ms. Phattharaporn Kerdkaew, and Ms. Siwaporn Phromwong revealed their analysis and decoding of 'fiscal risks' in three dimensions. The Thai economy and society post-COVID-19 face structural challenges, including economic and social inequality, an aging society, declining competitiveness, and changes in market structure and consumer behavior. External factors include intensifying geopolitical issues and changes in natural factors. These structural problems have created vulnerabilities in the fiscal sector, both directly by reducing the government's revenue collection capacity and indirectly by reducing economic growth potential.

In terms of fiscal dimensions, Thailand still has fiscal space for incurring additional debt under careful consideration. Prioritizing accelerating fiscal rebalancing is essential to maintain stability. Expenditures that are difficult to reduce in the medium term remain manageable, although they are trending upwards. Recommendations include establishing policies to control salary and compensation expenditures and developing the quality of government personnel. Thailand's government revenue collection capacity remains below the average among emerging markets and is expected to continue to decline. The government needs to expedite revenue collection to ensure it is sufficient to fund expenditure policies and maintain international standards.

Legal aspects reveal that Thailand's current fiscal discipline criteria can promote overall fiscal sustainability. The public debt ceiling level is in line with international standards and is still below the critical point that negatively impacts the economy. A flexible mechanism exists for crises under legislative scrutiny to avoid hindering economic stability. Over the past two fiscal years, the budget deficit has exceeded the threshold conducive to debt stability. If fiscal balancing remains unaddressed, the public debt-to-GDP ratio could rise above the current statutory ceiling.

Decoding fiscal risks from all three interconnected dimensions will enable systematic planning of fiscal rebalancing. The economic and social structural dimensions provide a "map" that helps understand fiscal obstacles and risk factors. The fiscal dimension offers a "compass" for identifying risks and determining the appropriate direction for fiscal rebalancing. The legal dimension provides a "gauge" for accurately capturing the state of the fiscal sector. If Thailand can effectively integrate these tools in fiscal rebalancing, it will drive the Thai fiscal sector towards stable and sustainable progress in the post-COVID-19 era.