The cabinet yesterday approved the medium-term fiscal policy for fiscal 2024-2027, with the aim of achieving a significant reduction in the budget deficit in 2024 to ensure fiscal stability.
According to Finance Minister Arkhom Termpittayapaisith, the government set the expenditure at 3.18 trillion baht in the 2023 fiscal year with a budget deficit of 695 billion baht, the latter being 5 billion baht lower than the previous fiscal year. The budget deficit of 695 billion baht is equal to 3.7% of GDP.
The government set the expenditure at 3.35 trillion baht for 2024 with a budget deficit of 593 billion baht which represents around 3% of anticipated GDP.
Mr Arkhom said that despite the significant reduction in the deficit in 2024, the government is not reducing expenditure but is maintaining the expansionary fiscal policy. The government is expected to collect net revenue of 2.75 trillion baht in 2024, up 10.7% from the revenue anticipated in 2023.
The government expects that at the end of fiscal 2027, the deficit will fall to 2.79% of GDP.
The government expects the ratio of public debt to GDP in fiscal 2023 to stand at 60.6% and reach 61.2% in 2027, still lower than the 70% ceiling.
In a related development, the cabinet also yesterday approved a headline inflation target of 1% to 3% for 2023, unchanged from this year.
The inflation target, which guides monetary policy, is reviewed annually.
According to Mr Arkhom, the government has maintained the headline inflation target at 1-3% next year as it wants to show that it remains committed to continuing to rein in inflation to prevent any negative impact on the country's economic growth.
Mr Arkhom added that the Finance Ministry has also worked closely and thoroughly with the central bank to take care of the inflation issue.
According to the Commerce Ministry's latest report, the country's headline inflation, gauged by the consumer price index (CPI), decelerated for three consecutive months, coming in at 5.55% in November from the same month last year, falling from increases of 5.98% and 6.41% in October and September, respectively.
On examining the 11-month average, the CPI rose by 6.1% from the same period of last year, which was close to the ministry's latest projection. The Commerce Ministry projected the headline inflation in 2022 at between 5.5% and 6.5% (6% on average) which is in line with the current economic situation and projections released by other government agencies.