Thailand Cabinet boosts 2024 fiscal budget by 122 billion baht

The Thai Cabinet approved a plan to increase the 2024 fiscal budget by 122 billion baht to support its delayed household stimulus scheme, Deputy Finance Minister Paopoom Rojanasakul today announced. This adjustment will raise the new budget to 3.6 trillion baht, representing a 13% increase from the previous year, with the deficit swelling to 805 billion baht.

The government’s decision comes as it prepares to roll out a 500 billion baht handout scheme, the flagship policy of the ruling Pheu Thai Party during the 2023 election campaign. Initially scheduled for an earlier launch, the scheme has been postponed to the fourth quarter due to funding shortages and concerns over the potential impact on public debt.

The government had earlier indicated the plan would be financed through the 2024 and 2025 budgets, with additional capital sourced from the state-owned Bank for Agriculture and Agricultural Cooperatives.

Economists and two former central bank governors have criticised the programme, arguing that it is fiscally irresponsible. The scheme aims to distribute 10,000 baht to 50 million Thais, encouraging them to spend within their local communities.

Despite the criticism, the government maintains that the initiative is crucial for revitalising the economy, which has underperformed compared to regional peers. The economic challenges include high household debt, elevated borrowing costs, and weak export performance amidst an uneven recovery in China, its top trading partner.

Prime Minister Srettha Thavisin expressed optimism about the country’s economic prospects, stating that accelerated budget disbursements could boost growth to over 2.5% this year.

“The budget has not been used yet, and there will be an acceleration in disbursements.”

The 2024 budget, which was passed last month, faced delays from its original start date of October 1 due to political gridlock following the May election. Additionally, the Cabinet has approved a 3.75 trillion baht budget for the 2025 fiscal year.

Finance Minister Pichai Chunhavajira revealed plans for other short-term stimulus measures aimed at reviving economic growth. He projected that the economy should expand by at least 3.5% annually.

Last month, the Finance Ministry revised its 2024 growth forecast down to 2.4%, though it noted that growth could reach 3.3% if the handout programme is implemented in the fourth quarter as anticipated.

Southeast Asia’s second-largest economy showed year-on-year growth of 1.5% in the first quarter, a deceleration from the previous quarter’s 1.7% growth. The overall growth rate for last year was 1.9%.