After a delay of six months, the government's 3.48-trillion-baht budget bill was finally approved by parliament on March 22, followed by the senate on March 25.
The government is expected to start disbursements from May.
With the Thai economy uncertain, given a lack of clarity on several key government initiatives as well as the direction of interest rates and currency fluctuation, the business sector hopes the full utilisation of the state budget will stimulate the economy across all industries in the second quarter.
With limited time left for fiscal 2024 expenditure, which ends on Sept 30, businesses are concerned about wasted opportunities if the government does not expedite appropriate plans to drive the country's GDP.
DISBURSEMENT SCHEDULE
Patricia Mongkhonvanit, director-general of the Comptroller-General's Department, said following parliamentary approval, the department will expedite budget disbursement.
According to Mrs Patricia, the department already has a monthly disbursement plan in place. However, this plan must correlate with the government's revenue and its borrowing plan to offset the deficit, she said.
The department set targets for budget disbursement in the first three months worth a combined 1.1 trillion baht after the enactment of the 2024 Expenditure Budget Act.
In the first month, the disbursements for both regular and investment expenditure are set at 400 billion baht. Another 300 billion baht is slated for disbursement in the second month, then 400 billion in the third month.
The department plans to convene again to set targets for expediting disbursements towards the end of the fiscal year.
Between Oct 1, 2023 and March 8 this year, the government disbursed 1.35 trillion baht from the fiscal 2024 budget.
Though the draft 2024 Expenditure Budget Act was under consideration by the House of Representatives during this period, the Budgetary Procedure Act of the Budget Bureau stipulates that in such cases, the government can utilise the previous fiscal budget act to bridge funding gaps, not exceeding two-thirds of total spending, in an attempt to ensure continued operations without interruption.
However, investment expenditure is only allowed for projects that have signed contracts.
Previously the department implemented several measures to accelerate spending of the fiscal 2024 budget, such as resolving issues related to appeals by unsuccessful bidders for government projects, which caused investment projects to be halted until an outcome on the appeal was decided.
This bottleneck was solved by decentralising the authority to address appeals at the regional level.
The 2024 expenditure budget calls for a total budget of 3.48 trillion baht, marking another fiscal deficit year for the government.
The budget plan calls for borrowing 693 billion baht to offset the deficit. Key expenditure aimed at stimulating the economy includes investment expenditure, set at 717 billion baht for fiscal 2024.
The department set a 75% disbursement target for investment expenditure in fiscal 2024.
The Fiscal Policy Office estimates that every 100 billion baht spent on government consumption will increase real GDP by 0.24% and raise the inflation rate by 0.10%.
For every 100 billion baht invested in government projects, real GDP increases by 0.28% and the inflation rate expands by 0.11%, according to the office.
PREPARE FOR A DOWNTURN
Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents (Atta), said foreign arrivals increased by 44% year-on-year during the first quarter, though this gain would ease in the second quarter as the high season ended.
He said the tourism industry would benefit more if the government budget was allocated during the low season.
Mr Sisdivachr said the long-haul markets from Europe and the US decline from April to September, leaving only Chinese and Southeast Asian tourists as frequent guests.
The market that can sustain the tourism industry during this period is domestic travellers, and the government should utilise the budget in the remaining five or six months of the fiscal year by stimulating local trips, particularly among those who have healthy purchasing power, he said.
"The domestic market was our saviour during the pandemic. We saw their huge potential when borders were closed, prompting them to spend within Thailand," said Mr Sisdivachr.
"As the travel situation returns to normal, we're seeing more Thais visit other countries, while low-income earners don't have enough money to travel."
He said if the government wants to initiate tourism projects or events, they should have a specific economic goal.
Key performance indicators are necessary as state authorities should be able to answer questions about how the budget utilisation can help the bruised economy, said Mr Sisdivachr.
Atta and 30 tourism associations formed a partnership called the Federation of Thai Tourism Associations (Fetta). Last week, the federation agreed to submit a white paper to the government attempting to highlight problems in the tourism industry and provide solutions.
Fetta said it wants to submit this paper to the government before the 2024 budget allocation starts in May.
"We would like the authorities to use the budget funds wisely, not for particular events that have very minimal impact," he said.
"The funds should address projects that can really help upgrade our services and tourists' experiences to maintain demand over the long run."
Mr Sisdivachr said there are several things the government could do immediately without waiting for fiscal budget disbursement, such as amending outdated laws and regulations, cracking down on scammers and heightening security for all tourism services.
These are issues the government should seriously address during the low season to prepare for the influx of visitors in the final quarter, he said.
Foreign tourists at Yaowarat area in Bangkok on March 17. According to the Association of Thai Travel Agents, international arrivals which sharply increased by 44% year-on-year during the first quarter would definitely not happen in the second quarter, due to unfavourable seasons. Apichart Jinakul
AUTO RECOVERY
Domestic sales have turned sluggish in the automotive industry, but there is an improved outlook for the second quarter as the government injects the budget into the economy, said Narong Sritalayon, managing director of Chinese automaker Great Wall Motor (Thailand) (GWM).
In addition to car manufacturers, other industries should also benefit from 2024 budget spending, he said.
"I believe we will see a positive change in the Thai economy from June," said Mr Narong.
"Investment from the state sector will return, helping to drive GDP."
Total car sales in the country fell by 26.2% year-on-year to 52,843 units in February. Only battery electric vehicles (EVs) and hybrid EVs reported sales increases of 28.6% and 65.8% year-on-year to 4,731 and 13,190 units, respectively, according to the Federation of Thai Industries (FTI).
Companies reduced production of passenger cars as more imports of EVs, especially from China, gained market share, while pickup manufacturers slowed their output as banks issued stricter criteria for loans to prospective pickup buyers, said Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club.
He echoed Mr Narong's prediction, forecasting the Thai economy to improve in the second half of the year as a result of budget spending.
Mr Narong acknowledged fluctuations in foreign exchange rates, as Kasikorn Research Center reported the baht hit its weakest value in five months at 36.48 baht to the US dollar between March 18 and 22.
"Baht depreciation should last for a short time. I believe the Bank of Thailand can deal with this issue," he said.
Authorities will implement measures to prevent currency volatility from affecting Thai exports, which will have a negative impact on the nation's GDP, said Mr Narong.
Thailand is a car production base, exporting internal combustion engine cars to many countries.
EV exports are expected to increase in the future, following construction of more EV assembly plants here, especially by Chinese automakers, he said.
GWM usually exports cars from China, while exports from its factory in Thailand make up less than 20% of its total exports, said Mr Narong.
Cars are displayed at the Bangkok International Motor Show. Total car sales in the country fell by 26.2% year-on-year to 52,843 units in February. Pattarapong Chatpattarasill
IT REVIVAL
Nuttanai Anuntarumporn, chief executive of Interlink Telecom Plc, said the fiscal budget approval should lead to new bidding in May after an absence of government projects in the third and fourth quarters of last year.
"We expect the government to allocate budget for information technology-related projects to support the national policy related to data analytics and digital transformation," he said.
The company expects to clinch projects worth 3-4 billon baht, said Mr Nuttanai.