Thai cabinet approves US$1.7b borrowing plan to boost economy

[BANGKOK] Thailand's cabinet approved a plan on Tuesday to borrow 57 billion baht (S$2.4 billion) for road and water projects as the military government tries to revive growth after months of political unrest took a toll of the economy last year.

The army seized power in May to end turmoil, but has struggled to spur Southeast Asia's second-largest economy as exports are weak and domestic demand subdued, putting pressure on the junta to speed investment spending to boost growth.

"The loan for road and water projects has been approved," Finance Minister Sommai Phasee told reporters after a cabinet meeting. "It will be in foreign currencies before being swapped into baht."

The government will start borrowing in April or May and will spend 34 billion baht on road construction and another 23 billion on water management projects, a finance ministry official said last week.

The loan is part of a plan to borrow about 80 billion in the current fiscal year, which ends on Sept 30, and next.

By March 13, government disbursement for the fiscal year to September 2015 stood at 1.173 trillion baht, or 45.56 per cent of the budget, with the majority of 1.06 trillion baht spent on current expenditures, said Somsak Chotrattanasiri, head of the Budget Bureau.

The government has spent 113 billion baht, or 25.35 per cent, of the investment budget of 449 billion baht earmarked for the fiscal year, with another 148 billion baht, or 33 per cent, underway, Mr Somsak said.

"There is a high possibility the 2015 disbursement target will either be met, or disbursement will be more than targeted," Mr Somsak told reporters after a cabinet meeting.

The government targets 87 per cent of a total investment budget to be disbursed in fiscal 2015.

Thailand's central bank unexpectedly cut its policy rate by 25 basis points on March 11 to help support an economic recovery It expects economic growth of less than 4 per cent this year, as government spending and exports remain weak and consumption sluggish.

In 2014, the economy grew only 0.7 per cent, its weakest pace since flood-hit 2011.

REUTERS