Zero-based budgeting framework to be discussed
One of the key issues in the memorandum of understanding (MOU) between the Move Forward Party and the coalition government is the adoption of zero-based budgeting, according to NESDC Secretary-General Danucha Pichayanan.
This budgeting approach is new to Thailand and requires all agencies to justify their budgetary needs each year, not basing these on previous budget data, but rather in accordance with future needs and objectives.
The NESDC has initiated preliminary discussions with the Budget Bureau, and they will hold discussions with four economy-related agencies, including the Ministry of Finance, the Budget Bureau, and the central bank to determine the feasibility of implementing zero-based budgeting, before engaging with the new government.
It is expected that the implementation of zero-based budgeting will commence in the 2025 budget year at the earliest and only once an understanding among all state agencies has been established.
Danucha indicated that implementing zero-based budgeting has both advantages and disadvantages. The advantage is that it reflects the future use of budgets, while the disadvantage is that it requires extensive data preparation and readiness by all government agencies.
Since the budgeting system encompasses all sectors, including central government agencies, local spending systems, as well as educational and healthcare institutions, it is expected that it cannot be implemented as early as in the 2024 budget year, but is projected to begin in 2025 or possibly 2026.
Furthermore, discussions will need to be held with political parties who will be part of the new coalition government and the four related state agencies, namely the NESDC, the Budget Bureau, the finance ministry, and the Bank of Thailand (BOT), to determine the appropriate approach. It is being suggested that zero-based budgeting be either implemented every budget year, or every five years, due to the varying details and formats involved, according to Danucha.
The 4 economic agencies are preparing to hold discussions with the new government and are ready to develop a zero-based budgeting framework. The implementation of zero-based budgeting is a large-scale endeavour that affects all sectors of the country. If the system is to be adopted, it will require comprehensive understanding of and preparation by all government agencies, Danucha said.
The budgeting system is comprehensive and interconnected with every sector of the country. Various databases must be established prior to implementing this system and making changes to the country's budgeting process, Danucha added.
