Cabinet approves increase in 2025 deficit

Cabinet approves increase in 2025 deficit

Government still weighing funding options for twice-delayed digital wallet

(Bangkok Post File Photo)
(Bangkok Post File Photo)

The cabinet has approved a plan to increase the 2025 budget deficit by 153 billion baht, a move aimed at stimulating an economy still lagging its peers in the region.

The revision would bring the budget to 3.752 trillion baht, up from 3.6 trillion previously planned, said Chalermphol Pensoot, director of the Budget Bureau at the Ministry of Finance.

The budget gap will widen to 865.7 billion baht, or 152.7 billion baht more than previously targeted, he said on Tuesday.

The 2025 fiscal year begins on Oct 1. The 2024 budget was only approved late last month, far behind schedule because of delays in forming the government after the election in May last year.

The announcement of changes to the 2025 budget comes as the government continues to seek funding sources for its signature 500-billion-baht digital wallet scheme, a one-time giveaway of 10,000 baht to 50 million Thais to be spent in their communities.

The digital wallet has also been delayed, first from February to May, and now until October at the earliest, the Pheu Thai-led government announced last week.

Prime Minister Srettha Thavisin has said Southeast Asia’s second-largest economy needed major stimulus and the handout plan could get it out of a “crisis”.

Last month, the government said it would adjust the 2025 budget to accommodate the digital wallet, a key campaign promise of the Pheu Thai party.

Mr Chalermphol said the budget would be used to stimulate the economy but did not specify if it would be used to fund the digital wallet programme.

Some experts have called the policy fiscally irresponsible and said that fixing the country's economy requires addressing structural problems that have weakened competitiveness.

The move to embrace a higher budget deficit follows Mr Srettha’s order last week to weigh various options to fund the handout plan. The original proposal to finance it through a one-time borrowing bill for 500 billion baht faced resistance from some state agencies and lawmakers, amid concern that the payout may fan inflation and widen the fiscal deficit.

Stimulus measures, including the digital wallet, are “extremely necessary” as Thai economy is coming off a decade of average sub-2% growth and faced other problems including uneven economic recovery post the pandemic and high interest rates, Mr Srettha said last week.

The World Bank on Monday cut its forecast for Thai GDP growth this year to 2.8%, from 3.2% earlier, citing a global trade slowdown and delays in fiscal budget disbursement.

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