The Nation October 13 1998

THE World Bank and the International Monetary Fund have warned that Thailand's planned expansion of the social security programme will cause a huge burden on the government budget in the future, according to Labour Minister Sompong Amornvivat.

He said the two international organisations, major creditors of the country, cautioned that the government should leave the to-be-expanded areas to the responsibility of the private sector.

According to Somphong, despite the warning from the two organisations, the government will proceed with the planned expansion.

''It's the government's duty to take care of welfare,'' he said.

He noted that the contribution for the expansion will not come from the US$17.2 billion economic aid package arranged by the IMF, to which the World Bank contributed $1.5 billion.

According to Somphong, the World Bank and the IMF also pointed out that the children education support fund overlaps the government's education fund which is designed to help the children of the poor.

The IMF, he said, suggested that if the government leaves the areas to the private sector, the expansion will have a positive effect on the capital market as private funds have more flexibility in investing money in the capital market which will ease corporate fund mobilisation.

The government has finished a draft bill for a change in the Social Security Act 1990. Parliament recently approved the first reading of the plan to expand the programme to cover retired people and children's education welfare for employees. Under the amended law, the government does not require employees and employers to contribute equally to the social security fund.

Currently, the programme covers four areas: the disabled, the wounded and the ailing, child-delivery, and death. Currently, the government, employers and employees are contributing one per cent each, to the social security fund.

Since the law was put in place in 1990, the Social Security Fund has accumulated Bt59 billion from all parties involved. Out of that, the state contribution totals Bt3-Bt5 billion a year, according to Chamlong Sriprasart, secretary general of the Social Security Fund Office.

The United States is a good example for Thailand if the government really wants to expand the social security programme to cover retired people. The US government, though having cut budgets severely, spends several billion dollars on Medicare, a programme designed for the retired.

The plan comes following Thailand's worst economic crisis in decades, which has led to massive layoffs in all sectors. The crisis has forced the government to cut expenditure sharply as revenue is declining.

BY WICHIT CHAITRONG

The Nation