The cabinet has approved spending of 3.48 trillion baht in the 2024 fiscal year starting on Oct 1, resulting in an increased budget deficit of 693 billion baht, according to a statement released on Wednesday.
The deficit would be 100 billion baht, or 14%, higher than the 593 billon projected in the fiscal 2024 budget approved earlier by the Prayut Chan-o-cha government. That budget called for a 5.2% rise in spending to 3.35 trillion baht, including 717 billion baht for investment. The projected deficit represented a 14.7% drop from fiscal 2023 that ends on Sept 30.
The new Pheu Thai government is preparing to spend heavily to stimulate the sluggish economy, based on the policy statement it delivered in parliament this week. A debt moratorium for farmers and reduced electricity bills are among its priorities.
The centrepiece of the revival effort is the 10,000-baht digital wallet programme, but ministers so far have been vague about how its estimated cost of 560 billion baht would be funded. The programme is expected to be introduced in February.
Public debt under the revised spending plan is expected to reach 64% of GDP by the end of the 2024 fiscal year, the government statement said. That is above the 60% limit that has been adhered to for many years but is still manageable in the view of most economists. The targets are part of a medium-term plan up to 2027, it said.
The government expects gross domestic product (GDP) growth of 3.2% next year, the statement said. That would be well below the 5% figure that Prime Minister Srettha Thavisin has said was possible if the digital wallet has the economic impact he believes it could have.
The post-pandemic economic recovery so far has been weaker than expected, with gross domestic product (GDP) growth in the second quarter of just 1.8% year-on-year, compared with 2.6% in the second quarter.
The Bank of Thailand projects full-year economic growth of 3.6% but has said it may lower the forecast in light of weak exports, in line with recent forecasts issued by banks and economic researchers.
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