Prior to 2001 and the Election of the Thaksin Government

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Until the year 2000, the government ran targeted poverty-oriented programs

of four basic types:

• Cash transfers to poor families and the elderly administered by the

Department of Public Welfare of the Ministry of Labor and Social

Welfare.

• In-kind transfers, of which the major example is the means tested lowincome

Health Card aimed at providing for medical services run by

the Ministry of Public Health. Other examples are the School Lunch

Program (Ministry of Education) and subsidies for housing.

• Income generation programs such as the Poverty Alleviation Program,

run by the Community Development Department of the Ministry of

Interior, which gives interest-free loans to low-income households for

income generation activities and the Student Loan Scheme, by the

Ministry of Finance, for students of low-income families at upper

secondary and tertiary levels of the education system.

• Special off-budget programs, often begun at the initiative of incoming

governments or ministers.

These poverty-oriented programs expanded sevenfold in baht terms

or from 1.1 per cent to 4.6 per cent of central government expenditure

between the fi scal years 1993 to 2000 (see Table 5.8). One component of

this increase is controversial – the Education Loans Program, which began

operation in 1997. There is dispute as to whether this program is povertytargeted

or not. Although it was offi cially said to be directed at poorer

students, the implementation of this targeting is left to the educational

institutions themselves. These institutions report that they lack the resources

to determine whether a student is or is not from a ‘poorer’ household and

therefore are unable to target the program to the poor in any meaningful

way. If this category is excluded, the increase in poverty-related expenditures

is from 1.1 per cent to 3.3 per cent of total expenditures. Because of changes

in the format of available data, instituted after 2000, this table cannot be

extended beyond that year.

The World Bank’s Public Expenditure Review for Thailand, completed in

2001 and covering the period ending in 2000, drew three main conclusions

from these data. First, contrary to popular impressions (perhaps due to

the number of programs), the level of government expenditure on povertyrelated

activities was quite small and the likely impact on poverty was,

correspondingly, also small. This assessment is supported by data from the

Bureau of the Budget (Table 5.8), discussed above. According to these data,

in the year 2000 poverty-related expenditures represented between 3.3 and

4.6 per cent of total government expenditures, depending on whether the

Education Loans Program is considered ‘poverty-related’.

The World Bank’s second conclusion was that targeting needs to be

drastically improved since many non-poor seemed to be receiving benefi t

(for example, for Health Cards) and since funds for cash and in-kind transfer

were seemingly allocated across provinces roughly by population, whereas

the incidence of poverty varied substantially by province and the greatest

proportions and numbers of poor were in the north and northeast. Thirdly,

there was a proliferation of programs to assist the poor, but coordination

between them was inadequate and there was little systematic effort to

evaluate the effects of the programs. Since fi scal year 1996, there have been

some attempts at rationalization with the Poverty Alleviation Program, job

creation program and some housing support receiving smaller allocations

and the rise in overall funds for poverty assistance in the two succeeding

years being driven by the Education Loans Program.

Contrary to the contraction in many parts of the budget following the

Crisis in 1997 and budget tightening agreed with the IMF, actual expenditure

for assistance to the poor rose from 25.6 billion baht to 34 billion baht (a

33 per cent increase in nominal terms and a 23 per cent increase in real

terms) between fi scal years 1997 and 1998, or from 2.8 to 4.1 per cent of

Table 5.8 Thailand: poverty reduction programs, 1993 to 2000 (millions of baht)

Program 1993 1994 1995 1996 1997 1998 1999 2000

Income Generation 315 602 1,911 2456 9147 18 301 20 587 11 772

Poverty alleviation program 0 0 923 1342 564 1 587 172

Job creation (road construction) 315 602 988 1114 133 0 0 0

Education loans program 0 0 0 0 8450 18 300 20 000 11 600

In-kind transfers 5422 7926 8629 11 007 7396 4947 12 538 14 943

School lunch programs 820 1833 2570 2633 3765 2425 2365 2546

Housing programs 1132 1648 1831 3388 1484 503 353 1150

Health Programme for the needy 3470 4445 4228 4986 5768 8418 9821 11 246

Cash transfers 0 612 914 1226 1787 1821 1688 2339

Nominal Total

(millions of baht, current prices, total above items) 5737 9140 11 454 14 689 25 582 33 989 44 987 41 449

As % of total expenditure 1.1 1.5 1.8 1.9 2.8 4.1 5.5 4.6

Nominal Total less education loans 5737 9140 11 454 14 689 17 132 15 689 24 987 29 849

As % of total expenditure 1.1 1.5 1.8 1.9 1.9 1.9 3.0 3.3

Real Total

(millions of baht, constant 2003 prices, CPI defl ator) 8170 12 401 14 677 17 791 29 343 36 062 47 588 43 158

Source: Bureau of the Budget, Bangkok.

200

total government expenditures (Table 5.8). The increase in the Education

Loans Program accounted for more than the total increase. The sum of

all other categories of expenditure, taken together, therefore contracted in

nominal and real terms, even though cash transfers and the Health Card

expenditures increased somewhat. Expenditures on school lunches, housing

assistance and job creation contracted sharply. A particularly signifi cant

change was the discontinuation of the Job Creation Program, which was

essentially for rural roads and which might have helped mitigate some of

the worst impacts of the Crisis on the rural areas.