Cabinet approves plan to raise 2024 budget
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Cabinet approves plan to raise 2024 budget

Finance minister says more short-term stimulus needed after disappointing Q1 figures

People visit a southern food fair at Seacon Square on Srinagarindra Road in Bangkok. (Photo: Apichart Jinakul)
People visit a southern food fair at Seacon Square on Srinagarindra Road in Bangkok. (Photo: Apichart Jinakul)

Thailand needs more stimulus measures to help the economy meet its potential after growth was lower than expected in the first quarter, Finance Minister Pichai Chunhavajira said on Tuesday.

The economy grew by only 1.5% in the first quarter from a year earlier. While better than analysts’ forecasts, it was slower than the 1.7% growth reported in the previous quarter.

“There was still growth but less than we had expected,” Mr Pichai told reporters.

“We need to find measures to stimulate the economy, short-term ones,” he added, without giving further details.

Mr Pichai said the cabinet on Tuesday approved a plan to boost the budget for the 2024 fiscal year to help finance its 500-billion-baht digital wallet stimulus programme.

He said the amount of the increase would be decided this month but should not exceed the 122 billion baht indicated earlier by the Budget Bureau, which would increase the total 2024 budget to 3.6 trillion baht.

Cabinet approval for the increased budget would be sought on May 28, he added.

The budget for fiscal 2024, which began on Oct 1 last year, was finally passed last month, as parliamentary consideration was delayed last year because of the lengthy process of forming a new government after the election.

The digital wallet programme entails giving 10,000 baht each to 50 million people to spend in their localities within six months. The Bank of Thailand had recommended it target vulnerable groups only, but the coalition-leading Pheu Thai Party has said the stimulus needs to be as broad-based as possible to be effective.

The government had previously said the scheme would be financed by the 2024 and 2025 budgets, and with a loan from the state-owned Bank for Agriculture and Agricultural Cooperatives.

The administration has been rushing to find sources of funding for its signature handout scheme, having already agreed to widen the 2025 budget deficit by 152 billion baht, bringing next year’s budget to 3.75 trillion baht.

Last month, the Ministry of Finance cut its 2024 economic growth forecast to 2.4%, but said it could reach 3.3% if the digital wallet goes ahead in the fourth quarter as planned.

On Monday, the National Economic and Social Development Council lowered its 2024 growth outlook slightly to between 2.0% and 3.0%, but said the handout could add 0.25 percentage points to growth this year.

Southeast Asia’s second-largest economy has lagged regional peers as it confronts high household debt and borrowing costs as well as weak exports amid an uneven recovery in top trading partner China.

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