New B700bn loan approved to save virus-hit economy

THAILAND: The cabinet has approved the draft of an executive decree authorising the government to borrow an additional B700 billion to revitalise the economy battered by the latest wave of COVID-19 infections, a government source said.

Workers form a long line as they wait to undergo a COVID-19 test at their construction site in Bangkok’s Laksi district yesterday (May 18). Residents in communities around the site are also being tested. So far, 680 of the 1,667 workers have tested positive. Of them, 120 are being treated in hospital. Photo: Pattarapong Chatpattarasill.

The draft was tabled at a cabinet meeting yesterday (May 18), chaired by Prime Minister Prayut Chan-o-cha.

The decree will authorise the government to borrow the money to rehabilitate the virus-hit economy as well as fund schemes to help people and entrepreneurs affected by the third wave of the pandemic which has been more severe than the two previous rounds, the source said.

Of the B700bn loan, about B30bn will be earmarked for the procurement of medical supplies, vaccine shots, research and the renovation of hospitals, the source said.

With the new loan, public debt, at the end of September, is estimated at B9.38 trillion or 58.6% of the GDP which is close to the fiscal sustainability framework ceiling of 60%, the source said.

“The reason for issuing the new loan decree is because the government has almost completely used up the B1trn loan under the decree issued last year to ease the economic impact during the first round of COVID-19,” the source said.

The source said that on May 11, the cabinet approved the disbursement of about B834bn under the B1trn loan decree, with B166bn remaining.

Senior Finance Ministry officials refused to comment on the matter yesterday because the meeting was supposedly secret. Details will be made known after the decree is officially published in the Royal Gazette, the source said. Anucha Burapachaisri, government spokesperson, refused to comment on this matter yesterday.

The Finance Ministry’s Fiscal Policy Office (FPO) previously slashed its economic growth forecast for the second time to 2.3% this year from its earlier prediction in January of 2.8% and 4.5% in Oct 2020, attributing the drop mostly to the battered tourism sector as a result of the COVID-19 pandemic.

In the fiscal year 2020 ending last September, the Revenue Department collected total tax revenues of B1.83trn, falling short of its target by 13.4% and 8.7% lower than over the same period in the previous fiscal year. In the first half of the fiscal year 2021 (Oct 2020-March 2021), it collected tax revenue worth B735bn, 9.4% lower than its target and 8.7% lower than on the same period in the previous fiscal year.