Thailand to borrow 700b baht for Covid relief: sources

Bangkok

THAILAND plans to borrow an additional 700 billion baht (S$29.6 billion) to fund measures to counter the worst wave of Covid-19 outbreak to hit South-east Asia's second-largest economy, people familiar with the matter said.

A meeting of the Cabinet chaired by Prime Minister Prayuth Chan-Ocha on Tuesday approved the new borrowing plan by the Finance Ministry, these sources said, declining to be identified before a public announcement.

The government proposes to spend 400 billion baht of the sum to help various sections of the society affected by the new outbreak; 270 billion baht will go towards reviving the economy, and the remaining 30 billion baht will be set aside to finance medical supplies and vaccines to contain the latest outbreak, they said.

The fresh borrowing can be completed before Sept 30 next year, and is on top of an ongoing 1-trillion baht debt plan authorised by the Cabinet last year to fund pandemic relief measures, they said.

Kulaya Tantitemit, a spokesperson for the Finance Ministry and head of its Fiscal Policy Office, declined to comment.

Anucha Burapachaisri, a government spokesman, also declined comment.

Thailand's public debt-to-gross domestic product (GDP) ratio may rise to 58.6 per cent by September with the additional borrowing, but would still be below the nation's 60 per cent debt ceiling, the people said.

The government will need to issue an emergency law that needs to be endorsed by the king before the public debt management office can begin raising fresh debt, they said.

Standard Chartered Bank expects a Prayuth-led fiscal policy committee to raise the debt ceiling to 65 per cent of the GDP by year end, when a clearer picture of the domestic Covid situation and effectiveness of fiscal measures in the short and medium term is expected to emerge. Additional borrowing may be through existing instruments, including treasury bills, promissory notes and savings bonds, Tim Leelahaphan, a Bangkok-based economist at the bank, said in a note Wednesday.

The yield on 10-year Thai government bonds rose four basis points to 1.82 per cent, while the benchmark SET index of stocks rose 0.1 per cent, set for a second day of advance. The baht rose 0.1 to 31.422 to a US dollar, poised to snap six days of losses, according to data compiled by Bloomberg.

Thailand, which is grappling with the deadliest Covid wave to hit the nation so far, slashed its 2021 growth outlook earlier this week, citing the delay in reopening borders to foreign tourists and slow vaccination. The economy may expand by between 1.5 per cent and 2.5 per cent this year, less than the 2.5-3.5 per cent forecast in February, the National Economic and Social Development Council said on Monday.

The country's budget deficit soared almost 17 per cent in the first half of the fiscal year that began in October as revenue tumbled, prompting the government to almost triple borrowing to meet the shortfall. The Cabinet this month gave in-principle approval for a US$7.2 billion assistance package that included short-term financial relief for those hit by the virus, as well as measures to stimulate consumption once infections abate.

Thailand has imposed curbs on businesses and travel to contain the resurgence in the pandemic; the nation's total caseload has almost quadrupled since the start of April. The country has vaccinated only about 2 per cent of its population, trailing the pace of countries like Indonesia, Malaysia and Singapore. BLOOMBERG