Treasury Balance Doesn’t Tell Full Story, Economists Say

Treasury reserves since 2013 at year-end, fiscal year-end and pre-tax collection periods.

BANGKOK — Government officials insist that depletion of the treasury’s reserves is a normal part of the budget cycle, despite the balance being lower than the same period in previous years.

While economists debate whether the depletion of the treasury is worrisome or just a cyclical phenomenon, several experts agreed that spending patterns, and high levels of deficit spending, reflect poorly on the regime’s fiscal management.

Responding to public concerns raised Monday about the 85 percent decrease in government coffers since the military came to power, a minister from the prime minister’s office said low cash reserves are normal for this time of year before being replenished by tax revenues.

The disclosure that reserves stood at 74.9 billion baht in December – down from a 2014 level of 495 Billion – should not alarm the public, said Vice Minister Kobsak Pootrakool, who drew a parallel with the hydrological cycle.


“If we compare the treasury reserves to the water levels of a dam, the water peaks at about the end of the rainy season [in] October and then gradually drops,” he said Tuesday.

Read: Thai Treasury Reserves Down 85% Since Coup

As Kobsak said and the numbers show, cash reserves usually peak at the end of the fiscal year in September before falling to their lowest levels around March before coffers swell again as taxes come in.

Still, December’s reserves on hand – 75 billion – were lower than they’ve been in the same period since the coup. Year-end treasury reserves for 2014, 2015 and 2016 were 325 billion baht, 179 billion and 386 billion baht, respectively.

 Finance Minister Apisak Tantivorawong said Monday the steep decline was intentional. The minister said the government had avoided taking loans to refill the treasury to relieve the interest on its debt obligations.

The numbers from Fiscal Policy Office, however, shows the government has borrowed 994 billion baht to offset deficits since the 2014 fiscal year.

After the matter was first raised by a government spokesman who sought to dismiss concerns the government was going bankrupt, university economics lecturer Decharut Sukkumnoed challenged his fiscal assertions, pointing out that however you explained it, the reserves were 420 billion baht less than when the regime came to power.

Many other economic experts later stepped up to explain that though the amount of cash on hand was lowest for at least a decade, it didn’t necessarily mean the government was running out of money.

Among them was former Finance Minister Korn Chatikavanij of the Democrat Party who also said the treasury balance does not reflect the government’s financial status.

On Wednesday Korn said the low cash balance was less worrying than how the government makes use of its funds in the face of a high deficit year.

Korn’s comments were along the same lines as Decharut, who said the important thing how the treasury balance reflects the government’s fiscal management.

“Generally, treasury reserves are used for both saving and spending,” Decharut wrote on Facebook. “But under the military government, the treasury balance has only been spent, and then they take more loans to fill it.”

Decharut said the government’s Q1 shortfall is expected to be 100 billion baht higher than the year prior, meaning the government should keep more cash in pocket.


He also pointed out that no explanation was given as to where all that money went between September and December, when the treasury fell from 441.3 billion baht to 75 billion baht.

Most of all, he said the regime must reign in its deficit spending, which has exceeded that of previous administrations.

“The military government should set a clear limit on budgetary deficits and not let funds be used for political purposes,” Decharut wrote. “Because more and more of it will create a burden on governments and Thai people in the future.”