14-9-2023 (BANGKOK) Thailand’s cabinet has given its approval for a substantial budget of 3.48 trillion baht for the upcoming fiscal year in 2024, which begins on October 1st. However, this move will result in an increased budget deficit, amounting to 693 billion baht, as stated in an official announcement released on Wednesday.
This projected deficit represents a significant increase of 100 billion baht, or 14%, compared to the 593 billion baht deficit that was originally projected in the fiscal 2024 budget approved earlier by the government led by Prime Minister Prayut Chan-o-cha. This initial budget proposal called for a 5.2% rise in spending, totaling 3.35 trillion baht, including 717 billion baht allocated for investments. This projected deficit represented a 14.7% reduction compared to the fiscal year 2023, which is set to conclude on September 30th.
The new government, led by the Pheu Thai party, is gearing up for significant spending aimed at revitalizing the sluggish Thai economy. This approach aligns with the policy statement presented in parliament earlier this week, which outlined priorities such as a debt moratorium for farmers and reduced electricity bills.
At the core of this economic revival effort is the 10,000-baht digital wallet programme. However, government ministers have thus far been somewhat vague about how they plan to fund the estimated cost of 560 billion baht associated with this program, which is expected to be rolled out in February.
According to the government statement, the revised spending plan is expected to push public debt to 64% of GDP by the end of the 2024 fiscal year. This exceeds the long-standing 60% limit but is generally considered manageable by most economists. These targets are part of a medium-term plan that extends until 2027, as outlined in the government’s statement.
Despite the ambitious spending plans, the government’s growth projections remain conservative. The statement anticipates a GDP growth rate of 3.2% for the coming year, well below the 5% figure that Prime Minister Srettha Thavisin has suggested could be attainable if the digital wallet programme has the economic impact he envisions.
The post-pandemic economic recovery has been slower than anticipated, with GDP growth in the second quarter of this year measuring just 1.8% year-on-year, compared to 2.6% in the second quarter. The Bank of Thailand has projected a full-year economic growth rate of 3.6% but has indicated a possible revision to this forecast due to weak export performance, aligning with recent forecasts from banks and economic researchers.
