Thai court clears US$12 billion crisis loan in win for Anutin

THAILAND’S Constitutional Court ruled in favour of the government over its US$12 billion emergency borrowing decree, handing Prime Minister Anutin Charnvirakul a major victory that clears the way for his flagship economic stimulus and energy transition programs. 

The judges ruled on Thursday (Jul 9) that the emergency loan decree to seek 400 billion baht (US$11.95 billion) earlier this year was entirely constitutional, including provisions allowing the government to finance longer-term energy transition initiatives, according to a court statement. 

The verdict removes the biggest legal hurdle facing Anutin’s fiscal agenda, allowing him to press ahead with a 200 billion baht stimulus package designed to support households and revive economic growth.

Following the ruling, the decree will be submitted to parliament for approval, but it is likely to pass easily because Anutin commands a large majority following February’s election.

“There’s now more certainty on short-term stimulus and fiscal support measures, which will be reassuring news for consumers and investors,” Peter Mumford, South-east Asia practice head at Eurasia Group, said.

“This is also a political win of sorts for Anutin and will reinforce the sense there’s a bit more stability at present.”

Thailand’s benchmark stock index traded as much as 1.6 per cent higher after the ruling, before paring gains to 1.4 per cent as of 12.18 pm local time. 

Thursday’s decision underscores the degree to which Anutin’s conservative administration enjoys a high level of establishment support.

His two predecessors as prime minister both fell from power after the Constitutional Court disqualified them.

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Natthaphong Ruengpanyawut, leader of the opposition People’s Party, said he was disappointed by the ruling but unsurprised.

“The projects the government is trying to implement don’t fall under the scope of the emergency decree on borrowing,” Natthaphong said. 

The ruling “shows a consolidation of power from various actors in the establishment to usher in a transition for Thailand”, said Olarn Thinbangtieo, a political science lecturer at Burapha University.

“This allows the government to move forward immediately with its plans.”

The “Thais Help Thais Plus” cash handout program is a cornerstone of Anutin’s economic agenda, aiming to lift domestic demand as the country grapples with sluggish growth, weak consumption and persistently high household debt. 

The program was launched in June, with about 26 million people set to receive 2,000 baht a month for four months to help offset the impact of higher living costs and global energy price shocks linked to the conflict in the Middle East.

The energy transition plan is a longer-term initiative aimed at reducing the energy importer’s reliance on imports and volatile fossil-fuel markets. 

“There’s still some uncertainty over exactly how the energy transition reforms and investment will proceed,” Mumford said.

Outstanding questions include whether, and for how long, the government can stick within its debt ceiling of 70 per cent of gross domestic product, given the additional borrowing, even as authorities have signalled that they will try and stay under the cap, he added.

The judges voted seven to two that the longer-term energy financing is constitutional, and unanimously voted that the stimulus package is constitutional. BLOOMBERG