Thailand mulls up to US$3.4 billion extra budget to finance cash handout plan

THAILAND is working on a supplementary budget that seeks to lift state spending by as much as US$3.4 billion, as Prime Minister Srettha Thavisin presses ahead with a plan to stimulate the nation’s economy through a cash handout. 

The details of the additional budget will be submitted to the Cabinet on May 28 once relevant agencies finalise details, Finance Minister Pichai Chunhavajira told reporters on Tuesday (May 21). The government opted for a supplementary budget instead of rearranging existing spending proposals to avert delays in public spending, he said.

The additional spending will be on top of the 3.5 trillion baht (S$130 billion) budget for the fiscal year that began on Oct 1 and will widen the 693-billion-baht budget deficit, or 3.6 per cent of gross domestic product, according to Deputy Finance Minister Paopoom Rojanaskul.

The supplementary budget is “the best way” to mobilise the 175 billion baht needed from the current budget for the so-called digital wallet, he said.

Srettha’s administration has pledged to shore up South-east Asia’s second-largest economy by handing out 10,000 baht each to 50 million adult Thais in the fourth quarter. Pichai said the stimulus would help bolster growth, after first-quarter GDP growth of 1.5 per cent lagged behind the performance of its regional peers. 

“We avoided a technical recession in the first quarter, but our economic growth for the quarter and the whole year are lower than neighbouring countries,” Pichai said. “This underlines the need for the government to find ways to boost growth.”

SEE ALSO

New Thai finance minister has chance to improve strained central bank ties

Thailand plans to increase budget by US$3.4 billion to fund handout scheme

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

The yield on benchmark 10-year government bonds rose four basis points to 2.787 per cent, the highest level since Dec 13. 

Officials did not spell out how the additional budgetary spending will be funded, and if it would all be through borrowing. 

Paopoom said the extra budget is unlikely to hurt the domestic bond market as the government will spread out borrowing over a few years, as the shops and vendors participating in the digital wallet plan will not be cashing out in one go. BLOOMBERG