PUBLISHED : 6 Sep 2024 at 10:50
The House of Representatives has approved a 3.75 trillion baht budget for the upcoming fiscal year commencing in October, empowering newly-appointed Prime Minister Paetongtarn Shinawatra to enhance state spending and stimulate a fledgling economic recovery.
This budget proposal reflects a 4.2% increase in government spending compared to the revised outlay for the current fiscal year, receiving support from 309 lawmakers during its final reading in the 500-member House late Thursday. Conversely, 155 lawmakers opposed the budget after a three-day debate.
The budget bill now advances to the Senate for approval and will take effect upon publication in the Royal Gazette.
The financial plan incorporates provisions to partially fund the coalition government’s debated cash handout initiative aimed at boosting consumer spending and manufacturing. Ms. Paetongtarn now confronts the significant task of revitalizing Southeast Asia’s second-largest economy, currently hindered by high household debt levels, sluggish exports, and a marred manufacturing sector impacted by low-cost imports, particularly from China.
The Prime Minister has committed to implementing strategies to navigate the nation out of economic “crisis,” with detailed policies set to be unveiled in Parliament next week. Moreover, her administration plans to revamp the proposed “digital wallet” scheme, which promises 10,000 baht to nearly all adult Thais, with the goal of elevating economic growth to 5%, a substantial leap from the average sub-2% growth observed over the last decade under military-led governance.
Investor sentiment in Thailand has shown positive signs following the resolution of prolonged political instability, exemplified by a 9% rise in the benchmark SET Index since Ms. Paetongtarn’s leadership nomination on August 15. Furthermore, the baht has appreciated by approximately 3.7% during this timeframe, reaching its highest value in over a year amid expectations of potential rate cuts by the US Federal Reserve later this month.
The proposed budget indicates a deficit financing plan totaling 866 billion baht, equating to 4.5% of the gross domestic product, with anticipated economic growth projected between 2.8% and 3.8% for the coming year. The government forecasts headline inflation to remain between 1.1% and 2.1%, alongside an estimated current account surplus representing 1.6% of GDP.
