Government set to inject funds to boost economy
The military-installed government began its second fiscal year on 1 October and prior to this date reports suggested around 200 billion baht would be deployed over the course of the fiscal 12 months with the key aim being to stimulate the still relatively stagnant economy.
Between the start of October and the end of December state agencies are preparing to draw down 86 billion baht for investment spending. This will be dispersed as the tambon municipality level, with more than 7,000 tambons being credited with five millon baht each to conduct repairs within their jurisdiction as well engage in construction. That will account for 36.2 billion baht, while the remaining almost 40 billion baht will be disbursed for small investment projects.
There is also 68 billion baht left over from the 2014-15 fiscal budget, and the Budget Bureau has indicated this money will also be drawn down. If this does indeed happen, the total will exceed the 118 billion baht drawn down during the same period as last year.
The Fiscal Policy Office recently stated the government aim of speeding up budget disbursement for the fiscal year 2016 should help to drive economic growth in the fourth quarter of 2015, and this in turn could well mean the full 2015 growth for Thailand will hit the upper end of its earlier forecast, at three percent.
A key plank in the government’s economic stimulus package is aimed at the rural economy, which is currently in some difficulty with prices for farm products stagnant and household debt growing on the back of the worst drought in a decade.
Each of 59,000 Village Funds are to receive one million baht each as a loan, which can be re-lent to low-income earners in rural areas.
The Budget Bureau believes speeding up budget disbursements will help kick-start the low end of the economy, with cash being readily and easily available for quick disbursement to what are essentially small projects.
Small projects are classified as those worth less than two million baht and the procurement process for these takes from 20 to 30 days, whereas projects above two million baht can take anywhere from a month to six weeks and sometimes a little more to be procured.
The government has announced a planned budget deficit for fiscal 2016 at 390 billion baht on the back of total expenditure worth 2.72 trillion baht.
The investment budget will total 543 billion baht. Of this, the largest chunk will be just over 400 billion baht for projects exceeding 10 million baht each. For projects starting at two million baht and up to no more than 10 million baht, the amount available is 101.4 billion baht.