Most of the government’s 77-billion-baht short-term investment budget is expected to be injected into the economy this year, says a senior official.
Theeraj Athanavanich, deputy director-general of the Public Debt Management Office (PDMO), said construction contracts worth 4 billion baht earmarked for roadwork and highway repairs and a 3.7-billion-baht water management project will be signed over the next 30 days.
Once these contracts are signed, contractors will be able to begin their work and the disbursement can be kicked off.
The investment projects were approved by the cabinet on March 17.
“The cabinet accelerated the approval of the projects because they wanted them to start as soon as possible. We estimate we will take around 90 days to sign all 5,000 contracts involved with these projects,” Mr Theeraj said.
“So far, matters seem to be progressing as planned.”
The government allocated the budget for roadworks and water management valued at 77 billion baht in total as part of the economic stimulus packages launched late last year.
The government’s plan is to boost the purchasing power of consumers through state investment projects.
However, the disbursement of the budget for these projects has slowed in line with the slow progress of state agencies in planning the projects, further depressing weak domestic consumption, which has been hurt by the prolonged political conflicts since late 2013.
Mr Theeraj said the acceleration of disbursement is essential to spurring domestic consumption at a time of contracting exports due to the sluggish global economy.
The state agencies are responsible for encouraging contractors to speed up their work and gradually submit documents to request payment in line with the percentage of completion.
“We’ve found some contractors have high liquidity, so they would rather wait until all work is done before proceeding with one-time payment requests, as they don’t want to deal with complicated documents even though they could get paid when they complete a project phase by phase,” Mr Theeraj said.
However, by doing so, subcontractors and suppliers will suffer since they face cash flow problems.
To fund these projects, the state has had to borrow a total of 57 billion baht from banks as approved by the cabinet initially, Mr Theeraj said.
The Finance Ministry plans to refinance these debts later by issuing long-term bonds in line with debt repayment capability.