The government set an ambitious goal to achieve a balanced budget in 10 years, even though several obstacles still remain.
Most governments over the past 30 years posted a budget deficit, according to data from the Budget Bureau.
Finance Minister Arkhom Termpittayapaisith said as the Thai economy is recovering from the impact of the pandemic, it is time to taper the stimulus packages and resume normal fiscal policy to direct the country towards a balanced budget in a decade.
Mr Arkhom said the ministry aims to achieve a balanced budget in 10 years by improving its tax collection efficiency and expanding the tax base.
Though the ministry plans to curb the deficit, he said the government will continue allocating higher expenditures to stimulate economic growth.
The annual investment budget must not fall short of 20% of total expenditure in order to enhance the country's competitiveness, said Mr Arkhom.
As part of the country's medium-term fiscal framework covering 2024-2027, the budget deficit is not projected to exceed 3% of GDP from fiscal 2024 onwards.
This is one method to steer the country back towards a balanced budget, said Fiscal Policy Office director-general Pornchai Thiraveja.
The framework was endorsed by the government in December last year.
According to the framework, the country is expected to post GDP expansion of 3.3-4.3% in 2024, with inflation in a range of 1-2%.
GDP growth in 2025 and 2026 is projected to expand 2.9-3.9%.
The inflation rate in 2025 is expected to range from 1.2-2.2%, rising to 1.3-2.3% in 2026, based on the framework.
GDP expansion of 2.8-3.8% is predicted for 2027, with inflation in a range of 1.4-2.4%, supported by increasing domestic investment, a rebound of the tourism sector, and the recovery of the global economy and trade.
Tourists browse street food during a tour of Yaowarat market in Bangkok. A rebound in the tourism sector has increased the government's net revenue. Varuth Hirunyatheb
FISCAL STATUS
The framework predicts continued expansion of the government's net revenue, posting 2.49 trillion baht this year before rising to 2.76 trillion baht in 2024, 2.87 trillion in 2025, 2.95 trillion in 2026 and 3.04 trillion in 2027.
The estimated increase in net revenue assumes an uptick in domestic consumption, investment and the tourism sector.
The government's expenditure is also expected to increase to 3.18 trillion baht in 2023, 3.3 trillion in 2024 and 3.46 trillion in 2025. Expenditure continues to hike to 3.57 trillion baht in 2026 and 3.68 trillion in 2027.
The framework projected a ratio of public debt-to-GDP at 60.6% for 2023, 61.4% in 2024, 61.8% in 2025, 61.7% in 2026 and 61.3% in 2027.
The fiscal framework is based on what the government calls the concept of "sound, strong, sustained".
The framework focuses on reasonable fiscal policy in line with the situation and expanding state revenue.
Government expenditure has continued to expand over the past several decades.
EXPENSES
In 2021, the interest expense on government debt was 194 billion baht, or 5.92% of total expenditure.
The interest expense tends to increase in line with rising government debt, which is expected to reach 9.08% in 2026.
Expense from welfare payment in the state and private sectors in 2021 was 450 billion baht and 402 billion baht, respectively.
These amounts are expected to increase in line with the trend of Thailand becoming an ageing society and related government policies, according to the framework.
Earlier Mr Arkhom said Thailand is now an ageing society, as at least 10% of the population is age 60 or older. The country is expected to become an aged society in a couple of years, meaning people age 60 or older will surge to 20% of the total population.
Thailand is projected to become a super-aged society in 2034, when people age 60 or older total 28% of the population.
In 2021, the government tallied debt of 7.18 trillion baht from borrowing for its own use. It also incurred debt of 304 billion baht from borrowing for state enterprises, and another 369 billion baht state enterprises borrowed on their own using government guarantees.
For 2021, the government accumulated debt worth 953 billion baht from funding projects under Section 28 of the monetary and fiscal discipline law.
The projects had the government ask state financial institutions to fund state projects first, with the government reimbursing these institutions later.
The government also has an outstanding burden of 61.3 billion baht required as a state contribution to the Social Security Fund.
The amount has declined as the government gradually makes payments to the fund.
An elderly man registers for the government's Rao Chana stimulus scheme without a smartphone. Thailand is considered an ageing society because at least 10% of the population is age 60 or older. Apichit Jinakul
NOT AN EASY GOAL
Danucha Pichayanan, secretary-general of the National Economic and Social Development Council, said it will take more time for the government to reach a balanced budget in the future if the tax structure is not revamped and expenses adjusted to increase state revenue.
He called for the government to rejig the tax structure, especially the personal income tax, to bridge the income gap and ensure a fairer system.
The government collected a low amount of personal income tax in recent years, according to the council.
During 2013-2021, personal income tax accounted for only 2.09% of GDP on average, which is low compared with an average of 8.3% for countries in the Organisation for Economic Co-operation and Development.
Somchai Pakapaswiwat, an independent analyst, said it is not easy to achieve a balanced budget as unexpected crises keep emerging in the world, including the pandemic outbreak and the Russia-Ukraine war, which disrupt the economy and can make the Thai government miss its tax collection target.
He said the Thai economy has grown at declining rates every year over the past two decades.
State revenue collection is going to become more difficult as the country's demographics trend older, resulting in more elderly and less working-age residents, said Mr Somchai.
Most tax revenue is collected from the working population, which is shrinking, while fixed expenditure for the elderly is bound to expand as that group increases, he said.
Mr Somchai said several nations in Europe run a budget deficit as it is a common practice in many parts of the world.
He said Thai political parties have not prioritised reforming the country's economic structure to bolster competitiveness, focusing instead on pledging short-term populist benefits.