Deputy PM defends mammoth borrowing to jump start growth

Photo courtesy of The Nation

In a heated parliamentary session yesterday, Deputy Prime Minister and Finance Minister Pichai Chunhavajira staunchly defended the government’s proposal to borrow a staggering 865 billion baht to mitigate the fiscal 2025 budget deficit.

Pichai argued that this bold move is essential to rejuvenate Thailand’s languishing economy and achieve targeted GDP growth. He assured lawmakers that the loan would adhere strictly to the government’s fiscal discipline framework.

The House of Representatives kicked off deliberations on the 2025 budget bill, which proposes a colossal 3.7 trillion baht in government spending against projected revenues of 2.8 trillion baht. The allocation includes 2.7 trillion baht for fixed expenditures, 908 billion baht for investments, and 150 billion baht for loan repayments.

While acknowledging that the borrowing would raise the deficit ratio higher than in fiscal 2024, Pichai emphasised that a significant portion of the funds would be channelled into investments to stimulate future economic growth.

“We need to borrow 865 billion baht to address the economic stagnation we’ve faced since the 1997 Tom Yum Kung crisis. The economy used to grow by double digits, but post-Covid-19, it’s been a mere 0.4% annually. This is abnormal.”

Pichai highlighted structural issues hampering competitiveness in both the industrial and agricultural sectors. He asserted that transitioning to a digital or green economy is a long-term endeavour, with strategic plans spanning short, medium, and long terms to boost economic growth beyond past averages and outpace neighbouring countries.

Despite the deficit, Pichai pledged to maintain fiscal discipline within a robust and transparent framework. He detailed short-term measures to boost domestic spending and tackle rising household debts by enhancing public access to loans from state financial institutions like the Government Savings Bank and coordinating with commercial banks.

“Financial measures will also be implemented to restructure debts, preventing them from becoming non-performing loans, thereby improving credit records and enabling future access to legal loans.”

Pichai expressed optimism that these short-term measures, combined with economic stimulus initiatives like the digital wallet scheme, could lift economic growth from an estimated 2.5% this year to a target of 3%.

“Budget deficits are necessary to stimulate the economy, while fiscal discipline must be maintained. Increasing deficits in the coming years may be required to boost competitiveness and employment. As the economy grows and state revenue rises, public debt is expected to decrease starting in 2027.”

From 2026 onward, revenue growth is anticipated to outpace expenditure growth, gradually reducing fiscal deficits and easing public debt pressures, reported The Nation.

“The government will prioritise short-term welfare issues and long-term structural economic adjustments through responsible and sustainable policies, aiming to elevate growth beyond historical averages and outpace regional competitors.”

ORIGINAL STORY: PM Srettha unveils 3 trillion baht economic boost plan

Prime Minister Srettha Thavisin rolled out a mammoth 3.753-trillion-baht economic revival blueprint aimed at turbocharging Thailand’s financial fortunes. As lawmakers embarked on a heated three-day debate, the Bangkok-born Thai PM pitched his vision to rejuvenate the sluggish economy, promising a surge in growth.

In a bid to unleash Thailand’s economic potential, Prime Minister Srettha Thavisin proposed a hefty 3.753 trillion baht budget for the 2025 fiscal year. Addressing the House of Representatives, the Thai premier articulated his strategy to kickstart growth.

“The budget has now been disbursed and we will discuss ways to ensure it is spent as quickly as possible.”

Highlighting projections, the 62 year old prime minister outlined an anticipated economic upswing of 2.5% to 3.5% next year, coupled with a moderate inflation forecast ranging from 0.7% to 1.7%. Despite earlier optimism for a fourth-quarter rebound, the government now shifts focus to ramping up third-quarter economic expansion, reported Bangkok Post.

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Puntid Tantivangphaisal

Originally from Hong Kong, Puntid moved to Bangkok in 2020 to pursue further studies in translation. She holds a Bachelor's degree in Comparative Literature from the University of Hong Kong. Puntid spent 8 years living in Manchester, UK. Before joining The Thaiger, Puntid has been a freelance translator for 2 years. In her free time, she enjoys swimming and listening to music, as well as writing short fiction and poetry.

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