The borrowing is necessary because higher energy prices will impact everyone, Finance Minister Ekniti Nitithanprapas said after the Cabinet meeting, reports the Bangkok Post.
The sum approved is B100bn less than the figure officials had been discussing earlier.
Half of the borrowing will be targeted towards vulnerable groups and the other half will be used to help fund the transition away from fossil fuels and towards renewable energy.
“We have to help vulnerable groups,” Mr Ekniti said, adding that the government would try to reduce living costs and push for clean energy use.
All of the borrowing will be sourced from within Thailand, he said, adding that the decree would be put to parliament next week.
The funds would be used from June to September, and would include aid for more than 20 million low-income people under the “Thais Helps Thais” scheme to ease living costs.
The US-Israel war against Iran that began in late February has sent global energy prices soaring, resulting in rising prices for oil and gas, shipping and consumer goods.
Anutin called the borrowing “a tool to move the country forward and prevent economic weakening”.
“We will get through this crisis together,” he told reporters.
The borrowed sum is among the highest in recent history, but below levels seen during the 1997 Asian financial crisis and the Covid-19 pandemic years.
Public debt stood at 66.4% of the country’s GDP in March, below the 70% ceiling, and the new loans will not breach the limit, Mr Ekniti said.
Thailand’s core inflation rate is forecast to reach 3% this year because of energy cost impacts, up from an earlier estimate of 0.3%.