The Government of Thailand has sanctioned a rise in the 2025 budget deficit by an extra 153 billion baht, to instigate an economic boost. As a result, the budget will increase to 3.752 trillion baht, a significant hike from the previously planned 3.6 trillion, according to Chalermphol Pensoot, the Budget Bureau director at the Ministry of Finance.
The budget deficit will therefore expand to 865.7 billion baht, which is an increase of 152.7 billion baht from the prior target, Pensoot revealed today, April 2.
The 2025 fiscal year kicks off on October 1. The government approved the 2024 budget far behind schedule due to holdups in government formation following the election in May of the previous year.
The budget amendment announcement for 2025 is timely as the government is currently exploring funding sources for its 500-billion-baht digital wallet scheme. This is a one-time distribution of 10,000 baht to 50 million Thais for expenditure in their localities.
However, the digital wallet programme has experienced delays, initially from February to May, and currently until October at the earliest, as announced by the Pheu Thai Party-led government last week.
Prime Minister Srettha Thavisin has underscored the need for significant stimulus to revive Southeast Asia’s second-largest economy and believes that the handout plan could be the solution to the economic crisis.
Digital wallet
Last month, the government indicated that the 2025 budget would be adjusted to accommodate the digital wallet, a major campaign promise of the Pheu Thai party. Chalermphol stated that the budget would serve to stimulate the economy, however, he did not specify whether it would fund the digital wallet initiative.
Several experts have criticised the policy as fiscally irresponsible and have argued that addressing structural issues is the key to fixing Thailand’s economy.
The decision to increase the budget deficit follows PM Srettha’s order last week to evaluate different options for funding the handout plan. The initial proposal to finance it with a one-time 500 billion baht borrowing bill encountered resistance from several state agencies and lawmakers. They raised concerns that the payout may fuel inflation and widen the fiscal deficit.
The 62 year old Thai prime minister argued last week that stimulus measures, including the digital wallet, are extremely necessary given that the Thai economy has experienced an average sub-2% growth over the past decade. He also pointed out other challenges such as an uneven economic recovery following the pandemic and high interest rates, reported Bangkok Post
The World Bank yesterday reduced its forecast for Thai GDP growth for this year to 2.8%, down from 3.2%. The bank cited reasons such as a worldwide trade slowdown and delays in fiscal budget disbursement.
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