Thai Prime Minister Asks Parliament to Approve Budget With $24b Deficit to Power Growth

(Bloomberg) -- Thailand’s Prime Minister Srettha Thavisin asked parliament to approve a deficit-heavy 3.75 trillion baht ($102 billion) fiscal budget designed to boost the nation’s nascent economic recovery, which has lagged behind peers in Southeast Asia.

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Spending for the year starting Oct. 1 would exceed expected revenues by about 866 billion baht, or 4.4% of gross domestic product, according to the plan parliament will deliberate in a special three-day session through Friday. Among the major items are an increase in investment spending and a cash-handout project to give each Thai citizen 16 years and older 10,000 baht via a “digital wallet” — which is opposed by the central bank.

Investment spending will be nearly a quarter of total expenditures, the highest proportion in 17 years, Srettha told parliament in a speech, during which he called the budget gap “important and necessary.”

“Total spending will be used to implement the government policies and stimulate the economy,” said the prime minister, who took office about 10 months ago. “We will manage it under fiscal and monetary frameworks in order to spend taxpayers’ money in the most efficient way.”

Only a portion of the 500-billion-baht digital wallet program will come from the fiscal 2025 budget, but it “will create spending, orders and employment that will become tax revenues for the government, which we can then use to lift our competitiveness,” he said.

Bank of Thailand Governor Sethaput Suthiwartnarueput, in an interview with Bloomberg News on Tuesday, remained firm on his opposition to the plan, saying the prudent thing would be to focus assistance on the needy. With private consumption forecast to expand about 4% in 2024 after growth of 7% last year, there’s no need to stimulate demand across the board, he said.

The budget bill is based on projected gross domestic product growth of 2.2%-3.2% in 2024 and a 2.8%-3.8% pace next year. Headline inflation is estimated in a range of 0.9%-1.9% this year and 1.1%-2.1% in 2025, according to the budget draft.

Thailand’s annual GDP of about $500 billion is the second-largest in Southeast Asia after Indonesia’s.

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