The government will borrow 1.5 trillion baht next year to counter the economic impact from the coronavirus pandemic amid dwindling state revenue.
A cabinet meeting chaired by Prime Minister Prayut Chan-o-cha on Tuesday approved borrowing of 1.47 trillion baht in the fiscal year starting Oct 1, according to a government statement on Tuesday. The fund-raising is seen down 11% from a revised 1.66 trillion baht this year, official data show.
The borrowing will be used to finance various economic stimulus programs, budget deficit, infrastructure investments and bailout of some pandemic-hit state enterprises, the government said. The public debt-to-GDP ratio will widen to 57.23% in 2020-21, near the legal limit of 60%, it said.
Thailand’s government and the central bank jointly unveiled a 1.9-trillion-baht stimulus early this year to cushion the blow from the pandemic but has so far spent only about a third of the amount.
The central bank last week called for “more targeted and timely” government policies to support the recovery in the tourism and trade reliant economy, that’s on course for its worst-ever contraction.
Of the total, 387.4 billion baht will be used to repay existing debt under management, which totals 1.28 trillion baht.
With the government spending and borrowings running below planned levels this year, risks of an increase in full-year borrowings is only a tail risk, according to Radhika Rao, an economist at DBS Group Holdings Ltd in Singapore.
Thailand’s relative success in containing the pandemic curve has helped in the outperformance of its sovereign bonds with yields remaining largely stable and attracting haven flows, she said.
The cabinet also approved 291-billion-baht investment by 44 non-listed state enterprises next fiscal year, Rachada Dhnadirek, a government spokeswoman, said.
The government is targeting a disbursement rate of 95% of the budget, which will finance key projects such as the industrial estate in the Eastern Economic Corridor and the mass transit project in Phuket, she said.
The total investment of state enterprises, including eight publicly listed firms, will increase to 432 billion baht and is set to boost the economy, Ms Rachada said.
A series of stimulus measures meant to drive consumption in the fourth quarter may help contain the hit to Thailand’s growth this year, Finance Ministry’s Fiscal Policy Office Director-General Lavaron Sangsni said. The economy may contract less than the 8.5% predicted by the ministry and 7.8% estimated by the central bank, he said.