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BANGKOK : Thailand's military-installed government on Wednesday unveiled a 1.66 trillion baht (48.5 billion dollar) budget for 2008, including a hefty 24 percent increase in defence spending.
Prime Minister Surayud Chulanont, a former army chief, announced the budget in a speech to the military-appointed parliament.
The budget for the next fiscal year, which begins on October 1, represents a six percent increase in government spending over the current year.
The budget deficit will jump 65 percent to 165 billion baht, Surayud said.
"The deficit will be 1.8 percent of GDP and will not affect the country's economic stability. The government intends to maintain continuous growth," he said.
"The 2008 budget is based on the assumption that the country's economy will grow by 5.0 percent and inflation will be around 3.0 percent," Surayud said.
Additional spending was needed to shore up sluggish private sector confidence and to boost the country's growth, he said.
Increased government spending would give a boost to Thailand's ambitious infrastructure projects, including additional rail lines for Bangkok's mass transit system and improved highways around the country.
Government revenues are expected to be 1.49 trillion baht in 2008. The budget deficit would be financed through loans on the domestic market.
Fixed government spending accounted for 72.8 percent of the total budget, investment 24.4 percent, and debt service 2.8 percent.
The Defence Ministry received the biggest boost, with an increase to 140 billion baht, representing 8.6 percent of the total budget.
That increase comes after the military nearly quadrupled defence spending in the wake of last September's coup.
After seizing power, the military raised its budget to 115 billion baht from 29 billion baht in the previous year.
Surayud has defended the increase by arguing that ousted prime minister Thaksin Shinawatra had ignored military spending during his five years in office.
"In the past, the military only had a budget to spend on administration, but the military had nothing new in terms of technology or training. We have stopped like we've been unplugged," he said.
The military has also pointed to the raging insurgency in Thailand's Muslim-majority southern provinces to justify its increased budget.
But Ukrist Pathmanrand of Chulalongkorn University's Institute of Asian Studies said the latest military spending boost was too much.
"Given the current economic situation, it is not appropriate to spend a lot on defence when everybody, including the grassroots people, have been affected by the economic slowdown," he said.
"The southern unrest and terrorism concerns are no excuse for raising the defence budget that much," he told AFP.
Analysts said the budget deficit was not too high, but warned spending was likely to increase after elections that have been promised for late in the year.
"With the current sluggish private investment, this government does need to spend more to boost the economy," said Charl Kengchon, a senior economist at Kasikorn Research Centre.
"But we have to be cautious because an elected government is likely to spend more to finance whatever projects they promise during the campaign. That could be a problem if government revenues fall short of expectations," he added.
- AFP /ls
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