Finance Minister Arkhom Termpittayapaisith on Wednesday defended the executive decree to borrow 500 billion baht to combat the public health crisis, insisting the loan would not exceed the public debt ceiling.
Mr Arkhom told parliament the government had tapped into funding sources available under the law to fight Covid-19 but they were still not enough to deal with new waves of the pandemic.
Prime Minister Prayut Chan-o-cha also told MPs the country was in critical need of the loan because nobody knew when the Covid-19 crisis would bottom out. He insisted the spending would be prudent and there would be enough money to buy sufficient supplies of the vaccine.
Mr Arkhom, meanwhile, said the government had not been able to collect much tax income during the 2021 fiscal year as a result of businesses losing income or closing as a result of the pandemic.
Funding from the 2022 budget bill, which is before parliament, would not provide a timely response to the crisis, he said. A comprehensive response could not be funded through normal budgetary procedures, so the government had to fall back on the emergency loan.
The decree allows the Finance Ministry to borrow 500 billion baht but loan contracts must be signed by Sept 30 next year, the minister said. About 30 billion baht has been earmarked to buy medical supplies, drugs, vaccine shots, research and the development of vaccines.
About 300 billion baht has been set aside for funding relief schemes for people across various sectors and the rest allocated for social and economic rehabilitation projects.
Mr Arkhom said the government would take into account financial discipline, cost-effectiveness and transparency.
The loan decree was published in the Royal Gazette and followed last year's one-trillion-baht emergency loan decree. The loans are likely to raise the government public debt level higher than previously expected.
The Public Debt Management Office projected the public debt-to-GDP ratio at the end of fiscal year 2020-21 to be 58.6%, near the fiscal sustainability framework ceiling of 60%, assuming the government spent the one trillion baht and 100 billion from the new loan.