An executive decree allowing the Finance Ministry to borrow 500 billion baht to fight Covid-19 has come into effect and it is hoped it will stimulate economic growth in 2021-2022 by another 1.5%, according to Finance Minister Arkhom Termpittayapaisith.
The decree, published in the Royal Gazette yesterday, is in compliance with Section 53 of the Fiscal Responsibility Act of 2018 and will be mainly spent on rehabilitating people's livelihoods and supporting the recovery of the virus-hit economy, he said.
Of the 500-billion-baht loan, about 30 billion baht is earmarked for the procurement of medical supplies, drugs, vaccine shots, research and the development of vaccines, he said.
About 300 billion baht is set aside for funding relief schemes for people across various sectors while the remaining sum of 170 billion is allocated for social and economic rehabilitation projects.
Mr Arkhom brushed off concerns about the country's fiscal soundness due to mounting national debt, saying the new borrowing has been evaluated and found to be appropriate and adequate to help people and revitalise economic activity.
"Under the plan, the country's economy in 2021-2022 will grow by another 1.5% based on projections. The forecast by the National Economic and Social Development Council (NESDC) is 1.5-2.5%," he said.
According to Mr Arkhom, Covid-19 played a key part in contraction last year, but thanks to the 1-trillion-baht loan under the decree issued last year to ease the economic impact of the first round of Covid-19, the contraction was only 6%, two points lower than the projected 8%.
He said the spending will have to be carried out by September next year and the public debt-to-GDP ratio is estimated at 58.6%, which remains under the legal framework of 60%.
"The loan decree will be forwarded to the House of Representatives for consideration as soon as possible," he said.
Danucha Pichayanan, secretary-general of the NESDC, said much of the 1-trillion-baht emergency loan has been approved, including 140 billion baht to fund the next phase of the co-payment "Khon La Khrueng" subsidy, the state welfare scheme for low-income earners, and the new "Ying Chai Ying Dai" shopping stimulus measure.
He said disbursement for schemes totalling 817 billion baht would push growth to 2%, noting that more than 163,000 jobs were created and some 90,000 farmers received training to help them increase productivity.
Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow said the money should be sufficient to help people and prop up the economy if the Covid-19 pandemic is prolonged and on the basis that the vaccine rollout goes as planned.
"However, we must be cautious because a new wave is hitting several countries. If the situation can be contained and there is no new wave, we may not need to borrow another 500 billion," the minister said.
According to Mr Supattanapong, the import sector has improved while private investment in the first quarter was clearly on the road to recovery.
Patricia Mongkhonvanit, director-general of the Public Debt Management Office (PDMO), said the borrowing of 500 billion baht will be undertaken gradually until the end of September next year and that about 100 billion baht is expected to be disbursed within this fiscal year.
She pointed out that the estimated public debt-to-GDP ratio of 58.6% at the end of September 2021 is based on the assumption that the 1-trillion-baht loan and another 100 billion baht are disbursed.
She said the borrowing plan for the 2022 fiscal year is still under review and will be revised as and when deemed necessary.
Asked about an early report that the cabinet had approved the 700-billion-baht loan decree, Ms Patricia said the 700-billion-baht was the framework set by the cabinet.