Of the B700bn loan, about B30bn will be earmarked for buying medical supplies, vaccine shots, research and the renovation of hospitals, a “source” explained to the Bangkok Post.
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 added.
By no small coincidence, the Kasikorn Research Center also issued its report on Monday, marking that that Thai economy had shrunk for the fifth consecutive quarter and noted that “relief measures remain instrumental amid economic contraction and rising cost of living.”
“Amid the strong economic rebound, commodity prices have risen significantly, contributing to a surge in inflation, which will inevitably push up the cost of living for Thai households. Since Thailand’s economic recovery is bound to be slower than the general trend of economic recovery worldwide owing to the high risks generated by the recent outbreak, the rise in Thai household income and employment will not keep pace with the rising cost of living – thus resulting in stagflation.
“Therefore, the Thai government may be compelled to issue more fiscal measures to alleviate household expense burdens. As the government has already taken out the remaining funds under the THB 1 trillion emergency decree loan, it may be forced to seek additional loans and expand the public debt ceiling beyond 60 percent. In the meantime, monetary policy may become less effective in rejuvenating the economy amid the current inflation trend.”
The move to borrow more money came as no surprise. The Kasikorn Research Center had already reported on Apr 20 that Thailand had just B240 billion left of the B1trn borrowed last year. By May 6 the national government had announced relief packages, including the ‘Rao Chana’ (We Win) payouts, totalling B225bn.
The research centre last month even warned that Thailand could not afford a ‘Fourth Wave’ of infections, a factor now finally being recognised and providing the impetus for the last-minute push to vaccinate the country to get the economy going again.
However, all this adds up to one simple thing: that the current government is tabling debt that it will not likely be around to pay for. Thailand is not alone as a country risking deeper national debt in what is recognised as the worst global economic crisis since the Great Depression, but the impact on real people, not just figures on a chart, is paramount. These are the same people who will be called on to pull the country out of debt in the years to come.
Phuket provincial government officials this week launched their efforts to provide support for those on the island suffering deep financial hardship due to the crisis, while not releasing any figures of just how bad the situation is. For people new to this, officials are often running around announcing projects to “improve” situations without actually saying what is wrong in the first place.
Expats have now experienced the brunt of this practice firsthand, especially with the long silence now broken over how and when foreigners can finally be vaccinated. This past week with the tirade at officials at the Phuket Check Point over private companies getting taxpayers’ funds to perform public health tests has also shown how this is wearing thin on Thai people’s patience too.
The ongoing practice has earned the current administration the moniker the “flip-flop government”. It seems fitting.
It also comes as the country marks seven full years since Army General Prayut took control of the country, on May 22, 2014. Happy anniversary, Mr Prayut.