Uttama: Budget bill has B400bn for investment
Damage to growth may be unavoidable
State investment worth over 400 billion baht is expected to be pumped into the economy in the second quarter after the passage of the delayed 3.2-trillion-baht annual budget bill for fiscal 2020, says Finance Minister Uttama Savanayana.
Shortly after the budget bill takes effect, 350 billion baht out of the 640 billion baht worth of investment budget can be drawn down because these projects' terms of reference (ToR) have been completed, he said.
"An additional 96 billion baht will be available for withdrawal later," Mr Uttama said.
The delayed fiscal budget is dragging down economic growth as a result of the impact from the coronavirus outbreak, drought and the global economic slowdown.
The government aims to push state investment to inject capital into the economy rapidly to be a driver in boosting the growth, Mr Uttama said. The 3.2-trillion-baht annual budget expenditure for fiscal 2020 was supposed to be available from Oct 1, 2019 but was hampered by the lengthy government installation and legislative process.
The budget bill has been sent for royal endorsement after passing the House and the Senate.
The Monetary Policy Committee's minutes from earlier this month, when the policy rate was slashed by 25 basis points to a record low of 1%, said both monetary and fiscal measures, as well as cooperation from related sectors, are required to jump-start the economy.
Mr Uttama said the remaining investment budget for fiscal 2020 is under process to draft ToR, which is expected to take 45-50 days to be completed. This investment is expected to be disbursed in the third quarter.
Apart from government investment, state enterprises, with a combined investment target of 350 billion baht this year, are another engine to drive the economy, Mr Uttama said.
Some 80% of the budget is estimated to be doled out this year, he said.
In addition, new measures to alleviate the impact of the coronavirus crisis will be launched soon, while experts forecast that the epidemic will abate in June or July.
Prime Minister Prayut Chan-o-cha has reiterated that the short-term measures to alleviate impact on the economy should be arranged in parallel with long-term measures to push forward the national strategy and improve competitiveness and technological adeptness, Mr Uttama said.
Deputy Prime Minister Somkid Jatusripitak on Thursday expressed his concerns about economic prospects, particularly for the first quarter of this year.
"Economic conditions may be more dire than expected because of the virus outbreak," he said. "GDP may see a contraction in the first quarter because of the tepid tourism industry as a result of the coronavirus outbreak."
Mr Somkid said the government predicts 30% of Chinese visitors will be lost in the first quarter, with the figure possibly rising to 50% if the coronavirus continues to be a concern into the second quarter.
Stock Exchange of Thailand president Pakorn Peetathawatchai said economic fundamentals remain robust, as seen by commercial banks' capital adequacy ratio of 17% and the country's foreign reserves of US$250 billion.
Coupled with the low-interest-rate environment and subdued inflation, the economy can bounce back quickly once the global economy recovers, Mr Pakorn said on Thursday.
The economy has managed to turn around swiftly after several crises, such as the Sars and bird flu epidemics, both of which were resolved in the past decade, he said.