Contemporary Thailand is facing a number of pressing financial challenges. First on the list is addressing existing debt issues plaguing the agricultural sector, commercial businesses, and public cohorts. Secondly, they’re deploying digital financial aid, to the tune of 10,000 baht per recipient, to alleviate the populace’s monetary struggles. The Thai government is also striving to decrease energy prices while simultaneously boosting tourism-related income. Lastly, they are intent on revising the country’s constitution.
Yet such undertakings demand substantial capital injection. Analysts, therefore, question the origins of these funds vital for the execution of such policies, along with their prospective burden on the national budget.
Pipat Luengnarumitchai, who helms Kiatnakin Phatra Financial Business Group as the chief economist, maintains the finances for these projects could stem from two possible sources – the regular budget or off-budget funds. However, should the regular budget be tapped, policy implementation could face a delay of up to five months.
The distribution of 10,000 baht in digital form and life-cost reduction necessitate the application of off-budget resources. This, Luengnarumitchai states, would call for amendments to the nation’s financial discipline regulations under Article 28.
In contrast, Burin Adulwattana, KResearch’s chief economist, advises that the funding’s source should not be the solitary focal point. Instead, the investment’s justification and its capacity to stimulate economic growth should also be considered. For state funding, Her proposed sources include increasing taxes – namely VAT, property, and wealth taxes – and encouraging foreigners to establish professional or retirement-based lives in Thailand, thereby inflating income procured from internationals.
Naris Sathapondecha, TTB Analytics’ presiding head, believes urgent initiatives should utilise the state budget, drawn from borrowings within the national budget framework, the financial discipline code, or the proclamation of an emergency royal decree. Such provisions would ensure explicit, direct usage of the state’s finances.
Public opinion stands behind the government’s capacity to accrue further debt, given that the current public debt rate only sits at 61%. Additional borrowings upwards of 500 billion baht would still keep the public debt within the financial discipline framework at 65%.
On the topic of the Public Debt Management Office (PDMO) borrowing immediately, despite its possibility, there are concerns over Thailand’s current state – whether it is truly on the verge of economic crisis. With household consumption showing a 7% growth in the last quarter, economists question whether further stimulation is indeed necessary. Historically, Thailand’s primary economic engine has been exports – a fact that alarms large corporations.
Financial experts are scrutinizing the need for universal stimulus. They highlight that financial assistance is most required by the vulnerable low-income group. Hence, more focused policies could potentially display a greater economic return.
Amornthep Jawala from CIMBT Thai Bank (CIMBT) posits that the budget required for urgent projects should be sourced from the treasury or the 2024 regular budget, or generated from increased tax revenue.
Three main concerns thread through the views of most experts. First, cash handouts, without supporting long-term economic, technological, or digital infrastructure development, could lead to wasteful spending, leaving the Thai economy stuck at 3% potential growth rate. Second, the specter of inflation. Haphazard money injection into the system could spur short-term inflation hike and disrupt monetary policy in a fragile global finance climate. Lastly, the treasury’s load. The urgent budget will partially draw from state banks, thereby foisting a long-term burden onto the government and possibly ratcheting up public debt; an improperly managed trend may push the debt-to-GDP ratio to an alarming 70%.
Dr. Supawut Saichue, an advisor to Kiatnakin Phatra Financial Business Group, claims that as it stands, the Thai government’s urgent policies, aimed to invigorate strong growth, appear effective. They include the distribution of 10,000 baht digital vouchers, which if used judiciously, could catalyze economic stimulation. However, he warns of the potential for a fleeting economic influx, cautioning the government to tailor measures to specific demographics to increase efficiency.
Be First to Comment