The Thai cabinet on Tuesday approved new minimum wage increases from January, tax breaks to boost spending and the second phase the government’s signature handout scheme, Prime Minister Paetongtarn Shinawatra said.
The Pheu Thai government had promised to raise the daily minimum wage to 400 baht nationwide to help drive the economy.
However, the tripartite wage committee on Monday decided to raise the wage to 400 baht only in the provinces of Phuket, Chachoengsao, Chon Buri and Rayong, and the holiday island of Samui in Surat Thani.
In the rest of the country, wages will rise by an average of 2%, to between 337 and 380 baht depending on the province. The current range is 330 to 370 baht.
Businesses had strongly opposed a 400-baht nationwide rate as unrealistic, given the varying economic conditions in different provinces.
Ms Paetongtarn said the cabinet also approved the second phase of the handout scheme worth 40 billion baht for four million elderly people who would receive payments by January.
The first phase of the scheme was launched in September, with about 14.5 million people having so far received payments of 10,000 baht each. The government plans to distribute the handouts to about 45 million people overall.
Also approved on Tuesday were tax breaks to boost consumption, with the government bringing back the Easy E-Receipt programme that proved popular last year.
Deputy Finance Minister Julapun Amornvivat said deductions of up to 50,000 baht would be allowed, based on proven spending but excluding domestic travel. The Easy E-Receipt programme will be in effect between Jan 16 and Feb 28, he added.
2026 budget preview
In a related development, the government projects a budget deficit of 860 billion baht for the fiscal year 2026, little changed from the current fiscal year that ends next Sept 30, with spending estimated at 3.78 trillion baht, according to a government statement.
The budget plan is based on expected economic growth of between 2.3% and 3.3% and inflation of 0.7% to 1.7% in 2026, the statement said.
The plan projects a public debt-to-GDP ratio of 67.3% at the end of fiscal 2026, up from 65.6% at the end of fiscal 2025.
The 2026 budget would increase spending by 0.7% from the 3.75 trillion baht planned for 2025, according to the statement.
The deficit would fall by 1% from the 870 billion baht planned for 2025.
“The fiscal target … still requires a deficit budget to maintain economic stability and focus on reducing the deficit to an appropriate level in the medium term,” the government said.
Inflation target unchanged
Ministers also endorsed a deal to keep the official inflation target unchanged in 2025, a victory for the Bank of Thailand after it resisted calls for a higher goal that would have paved the way for more rate cuts.
The cabinet endorsed an agreement between the central bank and Ministry of Finance to keep the inflation target in a range of 1% to 3%, Mr Julapun said.
Thai authorities have now agreed for a fifth straight year to keep the target range, even though actual inflation often undershoots as high household debt weighs on consumer spending and product prices.
The agreement also signals an easing of tensions between the central bank and the Pheu Thai government after clashes over interest rates and the best way to revive the economy.
The central bank ignored government calls to lower borrowing costs by leaving the benchmark rate unchanged at 2.25% last week, saying the current neutral stance was appropriate for the economy amid rising global uncertainties.
Keeping the price band at a moderate level is expected to provide the central bank with enough firepower to deal with future risks as US President-elect Donald Trump threatens to impose steep tariffs on imports.
Inflation has undershot the central bank’s target this year, averaging 0.3% in the first 11 months, though the central bank expects it to return to the lower end of the range this month. It was 0.95% in November, below the lower end of the official target for a sixth straight month.
The gauge is forecast to average 1.1% next year as medium-term inflation expectations are well anchored within the target, the Monetary Policy Committee said last week.
