Baht appreciation leads to 4 to 5 billion baht revenue shortfall

Revenue collection for the 2024 fiscal year fell short of government expectations by 4 to 5 billion baht due to the appreciation of the baht. This shortfall occurred as the fiscal year concluded in September, impacting the value-added tax (VAT) revenue from imports, particularly affecting oil imports.

Finance Permanent Secretary Lavaron Sangsnit explained that the rapid strengthening of the baht in the last two weeks of the fiscal year resulted in lower VAT collections. The appreciation meant that the prices of imports, when converted into baht, decreased, thus reducing the VAT collected. Lavaron noted that if it were not for this exchange rate volatility, revenue would likely have met government targets.

“The shortfall in revenue collection during the last two weeks of the fiscal year is entirely attributed to baht volatility. However, the decreased revenue for fiscal 2024 will not impact government spending as the budget expenditure rate generally does not reach the full 100%.”

For fiscal 2024, the government had anticipated a budget deficit, with expenditure set at 3.48 trillion baht (US$103 billion) against projected revenue of 2.78 trillion baht (US$82.3 billion). Moving into fiscal 2025, the government projects expenditure will rise to 3.75 trillion baht (US$111 billion), with anticipated revenue of 2.88 trillion baht (US$85.3 billion), continuing the trend of a budget deficit.

The Revenue Department is expected to contribute the largest portion of the revenue, estimated at 2.37 trillion baht (US$70.2 billion), followed by the Excise Department, which is expected to collect 609 billion baht (US$18 billion).

In a separate development, Lavaron presided over an award ceremony yesterday for educational institutions with exemplary repayment rates of student loans from the Student Loan Fund (SLF). He highlighted that recent amendments to the SLF law have had a positive impact on repayment rates. The revisions prioritise paying down the principal first, allowing for the deferral of outstanding interest repayment.

Revenue shortfall

During the last academic year, SLF repayments amounted to 25 billion baht (US$740.5 million), marking an increase of about 10% compared to the previous year. The total value of loans granted reached 52 billion baht (US$1.5 billion).

Chainarong Katchapanan, manager of the fund, emphasised that debt restructuring has encouraged more borrowers to fulfil their repayment obligations. The restructuring process temporarily suspends penalties, providing borrowers an additional 15 years to repay their debts.

This approach aims to discourage defaults, as penalties are reinstated if borrowers fail to meet their obligations. Over 200,000 borrowers have benefited from debt restructuring out of more than two million eligible accounts, reported Bangkok Post.

Lavaron concluded, “The SLF plans to expand access to debt restructuring options to state financial institutions, thus providing borrowers with more options.”