BANGKOK: The Cabinet on Monday approved a slightly higher budget of B3.2 trillion for the 2020 fiscal year to bolster the economy, which is growing at its weakest pace in nearly five years.
The first reading of the bill in parliament is scheduled for next week, but it is not expected to be passed into law for four more months due to political delays. The fiscal year began on Oct 1.
“The budget bill has been approved by the cabinet and it will be submitted to parliament today,” Prime Minister Prayut Chan-o-cha told reporters.
Overall spending will be about 7% higher than the previous year’s B3trn, with a deficit projected at B469 billion, or 2.6% of gross domestic product (GDP), up from the previous year’s B450bn gap.
Government investments are projected at B656bn, or 20.5% of all spending, up from last year’s B649bn.
The budget bill is expected to be effective in early February, after gaining all approvals and the King’s endorsement in late January, Budget Bureau chief Dechapiwat Na Songkhla told Reuters.
The budget has been delayed because the country only had its new Cabinet in July after March’s general election.
The budget bill needs to pass three readings in the lower house of parliament, in which the government has a fragile majority. The first reading is scheduled for Oct 17-18, and second and third readings in early January.
Last week, Gen Prayut said he hoped the bill would be passed, otherwise “people in the whole country will suffer, farmers will suffer, not only me”.
Nomura economist Charnon Boonnuch in Singapore said the slim majority “poses some threat” to the bill being approved.
“Any failure will not only imply a further slowdown in government spending but also heightened political uncertainty,” he said.
Bank of Thailand Governor Veerathai Santiprabhob told Reuters on Friday that there were some projects such as public-private partnerships and investments by state-owned enterprises that were not constrained by the budget.
Like many of its trade-reliant neighbours in Asia, Thailand’s exports have been hit hard by slowing global demand and the escalating US-China trade war.
While waiting for the new budget, officials have said there will be some funds carried over from the past year, while current expenditure can proceed as usual. The government has also asked state enterprises, which use a financial year, to speed up their investments.
The government in August launched a B300bn stimulus package, and said it would introduce more.
The central bank recently cut its 2019 growth forecast to 2.8% from 3.3%. Last year’s growth was 4.1%, which lagged most regional peers.
Courtesy: Published at The Phuket News on October 8, 2019 by Bangkok Post