Finance Ministry gauging need for further stimulus
published : 21 Jan 2021 at 04:00
newspaper section: Business
writer: Wichit Chantanusornsiri
The Finance Ministry plans on assessing economic conditions over the next two months before deciding whether to roll out further stimulus measures.
If existing measures are inadequate, the government stands ready to implement additional measures and there is sufficient room for the disbursement of a fiscal stimulus budget, said Arkhom Termpittayapaisith, the finance minister, at a virtual seminar titled "The Year Ahead 2021: Navigating the Path to Recovery" held yesterday by Kiatnakin Phatra (KKP) Financial Group.
The government could also issue a second emergency loan decree if necessary, said Mr Arkhom.
Approved in April, the 1-trillion-baht loan decree was aimed at shoring up the economy as the crisis continued.
"The public debt-to-GDP ratio is at 50%, compared with the 60% ceiling rate of fiscal responsibility. We could increase the ceiling rate if necessary," he said.
Mr Arkhom said the government still has to emphasise measures to stimulate domestic demand as the country is limiting foreign tourist entry, with stringent requirements in place to curb the outbreak.
The government issued a raft of measures to shore up consumer spending since last year and is expected to continue rolling out more private consumption-oriented measures throughout 2021-22.
Private consumption accounts for 50% of Thailand's GDP.
On Tuesday, the cabinet confirmed 210 billion baht in handouts to alleviate hardship caused by the latest outbreak.
Under a new financial aid scheme known as "Rao Chana" (We Win), the government will provide a total of 7,000 baht per person over two months through money transfers, covering 31 million people affected by the pandemic.
The number of eligible people is lower than last year's financial remedy of 15,000 baht over three months because the Rao Chana scheme has a screening procedure, said Mr Arkhom.
The scheme stipulates those who have deposits in their bank accounts of over 500,000 baht and have tax-adjusted income of more than 300,000 baht are ineligible for financial relief.
Under the 1-trillion-baht emergency loan decree, 390 billion was used for last year's 15,000-baht financial remedy scheme, 120 billion was allocated for economic rehabilitation and around 200 billion is being used for the 7,000-baht financial relief scheme, said Mr Arkhom.
Whether the budget is sufficient depends on the length and scope of the outbreak, he said, noting vaccines are key for making this determination.
Supavud Saicheua, an adviser for KKP Financial Group, said the second wave of outbreaks in Thailand could shave off 1.5% of the country's GDP growth, making full-year economic growth expand by around 2-2.5%.
Thai economic growth could contract for a second year if the pandemic continues to rage in the second quarter and foreign tourists remain barred from entry, said Mr Supavud.
The Bank of Thailand forecasts Thailand's GDP will contract by 6.6% in 2020 and forecasts 3.2% growth for this year, though the central bank admits the outlook could be cut in response to the recent domestic outbreak.
Foreign tourist arrivals were previously projected at 6-7 million this year, but the second wave could cause that estimate to dwindle to 2 million, a far cry from the usual 40 million per year, said Mr Supavud.