Executive Summary

This report provides an assessment of fiscal transparency practices in Thailand in relation to the requirements of the IMF Code of Good Practices on Fiscal Transparency based on discussions with the authorities and other organizations, the authorities’ response to the IMF fiscal transparency questionnaire, and other sources of information. The IMF Manual on Fiscal Transparency (2007) (http://www.imf.org/external/np/fad/trans/manual/) should be consulted for further explanation of the terms and concepts discussed in this report.

Thailand meets the requirements of the fiscal transparency code in many respects and exceeds them in a few cases. The legal framework underlying public finance is broadly sound. The budget process is well specified. The budget is linked to the strategic policy priorities of government and is based on a sound macrofiscal framework. Multi-year departmental estimates are used for budget requests. The legal framework for public debt management is clear, and reporting of public debt is transparent. Announced limits on debt and interest payments reflect commitment to fiscal prudence. The National Counter-Corruption Commission and the Office of Auditor General provide important independent checks on the integrity of public finances.

Fiscal transparency has improved in recent years and further reforms are planned. Budget documents provide extensive fiscal information. A more transparent and effective performance management framework has been developed, including specification of outputs and Key Performance Indicators. Accrual accounting and the GFMIS have been introduced in most of the central government, improving quality and timeliness of data. In the revenue departments, computerization and electronic filing have enhanced monitoring and have reduced the scope for abuse. The budget documents report extensively on SOEs. Public Service Accounts are being introduced to record the cost of Quasi-Fiscal Activities in SOEs and SFIs. The 2007 Constitution requires development of a new Public Finance Act with further improvements in budget management and presentation.

In other areas, further efforts would enhance transparency. Near-term priorities include:

• Comprehensive updating of the legal framework to: embed reforms in medium term expenditure planning and performance orientation of the budget; restrict the discretionary use of the Central Fund; and enhance fiscal reporting, oversight of extrabudgetary funds, and investment programming.

• Presentation of certified final accounts to Parliament and the public for 2005–2008.

• A four-year rolling public investment program, to facilitate needed expansion of public investment without increasing fiscal vulnerabilities.

• Strengthened regulation and transparency of procurement and of contracts under PPPs.

• Budget documents should include a comparison of budget figures to actual outturns, a more extensive medium term macrofiscal framework, a Statement of Fiscal Risks, and a report on tax expenditures.

Medium term strengthening of transparency would involve:

• Regulation of the extrabudgetary sector to enhance reporting, oversight, and governance, and to limit its use.

• Extension to a greater number of SOEs of public service accounts to make the cost of quasi-fiscal activities more transparent.

• Further clarification of criteria for allocation of central government grants to local authorities.

• Publication of an annual fiscal and budget strategy document early in the calendar year, and updating of the macrofiscal framework for the budget in April/May.

• Better tracking of budget execution, limiting the scope for cash carry-overs, more comprehensive budget reporting, registering and monitoring of all government bank accounts, and assuring the integrity of payment and accounting processes.