BANGKOK- Thailand’s cabinet approved a plan to increase next year’s budget deficit by 152.7 billion baht ($4.17 billion), a senior official said on Tuesday, a move aimed at stimulating an economy lagging its peers in the region.
The revision would bring next year’s budget to 3.752 trillion baht ($102.40 billion), up from 3.6 trillion previously planned, Chalermphol Pensoot, director of the budget bureau told reporters.
The announcement comes as the government seeks funding sources for its signature 500 billion baht ($13.64 billion) “digital wallet” scheme, a one-time giveaway of 10,000 baht ($272.85) to 50 million Thais to be spent in their communities.
Prime Minister SretthaThavisin has said Southeast Asia’s second-largest economy needed major stimulus and the handout plan could get it out of a “crisis”.
Last month, the government said it would adjust the 2025 budget to accommodate the digital wallet, a key campaign promise of the ruling Pheu Thai party. It has been delayed to the fourth quarter this year due to funding issues.
Chalermphol said the budget would be used to stimulate the economy but did not specify if it would be used to fund the digital wallet program.
Some experts have called it policy fiscally irresponsible and that fixing Thailand’s economy requires addressing structural problems.
Thailand’s economic growth is expected at 2.8 percent this year before accelerating to 3.0 percent in 2025, the World Bank said on Monday, on account of weak exports and a delayed budget.
The growth outlook for 2024 and 2025 was reduced from 3.2 percent and 3.1 percent respectively, as forecast in December.
Southeast Asia’s second-largest economy expanded 1.9 percent in 2023 and unexpectedly shrank 0.6 percent in the final quarter of 2023 from the third.
Thailand’s central bank in February also lowered its 2024 growth outlook to 2.5 percent to 3.0 percent from 3.2 percent.
The cut stems from global trade slowing while the delayed budget slowed government spending, World Bank Senior Economist Kiatipong Ariyapruchya, told reporters in a virtual briefing.
Dimmer export and public investment prospects also attributed to new outlook, the World Bank said in statement.
The shipper’s council expects exports to grow 1 percent to 2 percent this year.
Tourism and private consumption will be key growth drivers, the World Bank said, with tourist arrivals projected to reach 90 percent of pre-pandemic levels this year.
The government is aiming for a record of 40 million foreign visitors this year after welcoming 28 million visitors in 2023.
