The government is able to borrow an additional 100 billion baht to offset a budget deficit if state revenue collection for fiscal 2021 misses its target, says the Budget Bureau.
If the coronavirus outbreak is still battering the economy and causes a shortfall in state revenue the next fiscal year, the government is allowed to run up an additional 100 billion baht in debt, said director Dechapiwat Na Songkhla.
The fiscal 2021 budget deficit will widen to 730 billion baht if the additional 100 billion in borrowing is sought, he said.
The 2021 budget, which is being vetted by the government, has set targets for expenditure at 3.3 trillion baht and revenue at 2.67 billion baht, leaving a deficit of 630 billion baht. The investment budget amounts to 674 billion baht, representing 20.5% of the annual budget.
According to the Public Debt Management Act, the government's borrowing to offset a budget deficit is capped at 20% of that year's budget, plus up to 80% of budget set for principal payment.
The Bank of Thailand recently predicted that the Thai economy would bound back to 3% growth next year from a 5.3% contraction in 2020, assuming a coronavirus vaccine is ready next year.
But Standard Chartered Bank Thai was more pessimistic, saying economic growth could take at least two years to return to pre-pandemic levels. The bank estimated growth at 1.8% in 2021 and 2.5% the following year.
Mr Dechapiwat said the Budget Bureau and related agencies will jointly evaluate impacts on the 2021 annual budget, particularly state income, by the second quarter of the fiscal year.
Some 400 billion baht in borrowing under a royal decree, part of the 1-trillion-baht borrowing plan, will be vital in reviving the economy as the government aims to use the money to create jobs to boost the local economy, he said.
The National Economic and Social Development Council (NESDC) is considering the allocation of the 400 billion baht, Mr Dechapiwat said.
Thosaporn Sirisamphand, the NESDC secretary-general, said recently that the 400 billion baht would go mainly to four areas: future sustainable growth sectors such as smart agriculture, large-scale farming, food processing, bio-economy and tourism, especially domestic tourism; local economic development such as community businesses, One Tambon One Product and community tourism; household and private consumption stimulus; and small-scale infrastructure development.