Thailand's budget adjusted to new government policy
The Ministry of Finance and the Budget Office are planning a meeting to review possible amendments to the Budget Act for the upcoming fiscal year. These plans are up in the air pending the policies of the newly elected government. The bill, which was approved by the previous government in March, set a state budget of 3,35 trillion baht for the fiscal year starting in October.
Ministry officials have said that both the Budget Office and the Ministry of Finance will thoroughly examine the budget to determine whether adjustments are needed to bring it more in line with the policies of the new government. Completely rewriting the fiscal account is also an option, although this requires a review of the country's projected revenues, expenditures and other economic indicators.
New government
The Move Forward Party, led by Pita Limjaroenrat, is currently forming a governing coalition of eight political parties with a total of 313 MPs, following their victory in the recent elections.
Of the 3,35 trillion baht included in the Budget Act, 2,49 trillion baht has been earmarked for regular spending, 717 billion baht for investment in development projects, 117 billion baht for debt repayments and an additional 33,7 billion baht as treasury reserves.
Thailand's national debt currently stands at 10,79 trillion baht, representing 61,2% of its annual gross domestic product (GDP) of 19,42 trillion baht. This debt level remains below the 70% of GDP limit set by the State Monetary and Financial Policy Committee.
The Public Debt Management Bureau expects the country's public debt to reach 61,73% of GDP by the end of the current fiscal year. This leaves a margin of about 8-9% of GDP, equivalent to 1,5 trillion baht, for additional borrowing to stay within the 70% mark.
Source: NNT
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Whether Pita wins remains to be seen.
It doesn't look so rosy. At the moment he is 68 short.
Many join Payut and associates,
The South has rejected Pita, who wants equal rights for gays and lesbians.
Muslims don't accept that.
Pita has won, that has already been proven. And he is allowed to investigate which political parties want to cooperate with the MFD to enable a new government with Pita as PM. Tomorrow will become more clear when the announced MoU is presented. The Thai population has once again said in a poll that they are satisfied with the results: https://www.bangkokpost.com/thailand/politics/2575160/most-people-satisfied-with-election-results-nida-poll At the moment, Pita can boast a support of 313 seats, he is 63 short. The DP with 25 seats will support him. Smaller parties that cannot or are not allowed to participate in the MoU provide similar support. Then there are at least 15 senators considering support. The Senate will hold an extra session on Tuesday. And of course there are always groups that want different. Next week is crucial because more clarity. So far things look very promising for Pita, the MFD and the Thai people. Thailand will gain a lot of prestige internationally. What I hum you!
The upcoming new government faces major challenges including major economic challenges. I hope the Move Forward Party manages to lead this, but it won't be easy. It would be quite an achievement if they can fulfill half of their ambitions.
See also:
“Before trying out such new policies, existing macroeconomic problems must be fixed first. These time bombs are waiting to destroy the economy. They are (1) household debt (2) public debt (3) liquidity adequacy and (4) the cost of living.”
https://www.bangkokpost.com/opinion/opinion/2573067/new-govt-faces-4-economic-time-bombs
I think things are being exaggerated here.
A posting was published not so long ago about the debts of Thai households. This is more about irrecoverable or problematic debts.
With the national debt, it is not too bad at all. The government debt/GDP ratio is approximately equal to that of the Netherlands (50%), while that of the USA is 135%, and also with a much larger economy.
What nobody actually pays attention to is the informal economy in Thailand. The government should do something about this by better combating corruption and, for example, legalizing (possibly nationalizing) illegal activities (such as gambling and casinos). This has to be done gradually because the black money is now also partly spent in the regular economy.
And black money will not all become white in the short term because you need a huge washing machine for that.
The national debt as a percentage is indeed not too bad if you compare it with, for example, the USA, but Thailand is a middle-income country and that debt can still become a heavy burden. Especially when interest rates rise.
How much room do they have left to take on some government debt in a responsible manner? To be honest, I don't care much about that.
Household debt is a serious problem. Especially with regard to those “loansharks” and their exorbitant interest rates that have to be paid by people who were already not so well off.
You are right about the informal economy. Legalizing gambling would indeed not be a bad idea. Then you can prevent some of the excesses with regulation and at the same time levy taxes.
You can do the same with other things that are still illegal today: drugs and prostitution. In my opinion, you should not prohibit adult people from voluntarily choosing what to do with their bodies, and prohibition only leads to crime, corruption and other misery. Just as we tax alcohol and tobacco, you can do the same with other drugs and then use that income to provide education, addiction treatment and other mental health care for those who do go wrong. This also prevents a lot of stress that depresses labor productivity. This also applies to the Netherlands, where we spend billions of euros a year on the police and judiciary to fight a “war on drugs” that can never be won.
Legalization will not solve all problems, but it will make things easier to control and it will limit the costs for society.
And then the cost of living: energy is also expensive in Thailand. Not so much for us when we move there, because the Netherlands is more expensive. But with a low or average Thai salary it cuts into it. LNG imports in particular have recently become expensive for Thailand and that also affects the price of electricity.
Thailand is missing opportunities in the field of solar panels, because I hardly see them on the roofs there. This could incentivize the government to reduce household electricity bills.
Solar panels, wind turbines and electric cars have fallen enormously in price and this will continue in the coming years due to a lower unit price with every increase in scale of production. Also see:
https://decorrespondent.nl/14477/zelfs-optimisten-zijn-te-pessimistisch-schone-energie-wordt-spotgoedkoop/7207da32-0828-04b1-2c67-69741dee4163
By encouraging such things, Thailand can reduce energy costs for households, limit fuel imports to keep more money in its economy, and also limit the costs of air pollution through lower medical costs and less loss of labor productivity due to illness and premature death.
As far as air pollution is concerned, you also have to deal with combustion in agriculture, which partly comes from neighboring countries. I think they could make better agreements for this within the ASEAN partnership.
You write that energy is also expensive in Thailand. Research shows that the bill is around 740 baht per household (data 2021 and there has been no real increase since then), a household consists of 3 people on average, so a bargain. You cannot purchase solar panels of 150.000 – 200.000 baht for these kinds of amounts, because that does not pay off and the solar panels are simply too expensive for most people.
Debts from loansharks are not a problem at all because yes borrowing money from them means that you have already gone through all the regular channels and have borrowed money there including banks and the village fund for almost free loans. Then no Apple or car, or 3rd motorbike, but no, it has to come and that is why everything is borrowed for it and then complain afterwards. Most, if not the vast majority, do not borrow for food but for luxury, in most countries people are considerably poorer than in Thailand, but they do not have debt problems.
The informal economy comprises 40% to 60% of the total economy. If they would first levy income tax on all those in the informal economy, things would look a bit better. Ask the common man who is not employed and you will hear amounts of 300 to 500 baht baht per year (!), Think of all merchants, shopkeepers, all delivery people, all small businesses and self-employed people, craftsmen, farmers (20 million) etc. Many earn a lot of money and blame the government but pay no income tax. This is a major task, but then you are talking about half of the working population, if not three quarters, which pays nothing or almost nothing, people prefer not to burn their fingers on that in politics.
Usually I like your entries Ger.
But defending something with 'average' is utter nonsense today, especially in Thailand.
Dividing the total number of inhabitants of Thailand by three and letting go of the total energy consumption as an average is nonsense.
Usually if not always it is really four figures, so the amount mentioned per person per month.
The rest of your story and statement is of course correct as a swearing finger, the Thai would gain the greatest benefit if one takes a look at their own behavior and corrects it.
But yes, that @#$%^& loss of face has some feet in the earth.
Yes, dear William, as far as energy costs are concerned, I first looked it up: there are 18 million households and that is rounded off to 3 people per household. Ditto for the energy costs per household, I googled and I came up with the amount of 740 baht
average per household.
Here, for example, a link about the household size where they talk about 18 million households, so you can find more by googling where you end up with the same thing because about 3 people per household:
https://www.statista.com/statistics/728355/number-of-households-thailand/
and a link where they talk about 3 people per household:
https://population.un.org/Household/index.html#/countries/840
And here's a link with household consumption over different years... 2021 was 743 baht on average per month per household:
Google on : Average monthly electricity consumption value per household Thailand 2012-2021 Statista
and then you see some numbers.
Ger to elaborate on this is offtopic, so people are not waiting.
I personally have great difficulty with the phrase 'average' and wonder very seriously how these types of sites arrive at those figures.
Every government, new or old, has to deal with those 4 problem areas mentioned, not least the current one because in power since 2014 and until now these 4 areas have only seen to grow. The bottom of all that was laid in the Shinawatra era preceding it (Thaksin, Yingluck). Households have been encouraged to spend, finance through debt, a trend that continues to date. If you allow 1) you shouldn't complain if 4) arises.
The policy of the PTP is a derivative of what Thaksin propagated earlier and what was called Thaksinomics: winning sympathy by generating large sums of money, eg now again the digital 10K baht handout. The advice of the writer of said article advises Pita at the end to first get rid of the legacies of previous governments. Of course never do. Never become an extension of previous governments that left huge mountains of debt. But getting to work with new fresh ideas and solutions. Optimistic but realistic and not making the same populist mistakes.
Dear Soi,
In my opinion, the advice to first eliminate the legacies of the previous governments is precisely intended to introduce a new and better system that can eliminate the problems (including the mountain of debt) that the previous governments have caused. I don't exactly know the Move Forward Party's election program, but I think Pita is the right man for this.
And hopefully the gigantic gap between (extremely) rich and (extremely) poor will also be made a lot smaller by the new government.
Dear Frans, getting rid of mountains of debt, whether in the state economy or in the private sphere, is always accompanied by cutbacks, reforms and new policies. I don't see the new government making cutbacks because Thailand absolutely needs renovation of its entire infrastructure. Just think of the consequences and damage of the annual floods and air pollution. Reforms? I hope so. But I don't read anything spectacular in the party program of MFP. https://www.thailandblog.nl/politiek/verkiezingen-2023/de-standpunten-van-move-forward/ New policy? Thai households need a completely different attitude towards money, the desire to buy, consumption, frugality, maintenance, discipline, etc. if private household debt is to shrink.
In the Netherlands, the gap between rich vs poor is only growing bigger and bigger. In short: will not work in Thailand either. https://www.youtube.com/ScientificCouncilWRR
Dear Soi,
Thanks for the link.
For the most part I agree with you, including the ease with which the average Thai takes on debt (also often just to show off). The MFP will of course not be able to solve everything in one go, but they do have good points in my opinion. The defense cuts seem to me to be a good start (eg no longer buying submarines) but again not so much that China will become interested in Thai territory, also stopping support for Thai Airways would be a good move in my opinion. Furthermore, the improvement of financial support for the elderly is a good point, I will never forget how a few years ago I saw a woman in her 1s fishing empty plastic bottles from a klong in Bangkok, I just walked over to see it make her financially a little easier. The tax for the rich Thai is very low in my opinion, this could / should be increased. I totally agree with your point about the infrastructure, I traveled to Udon Thani last January, there are holes the size of sinkholes in the way there, and for example the sidewalks in Bangkok are a survival trip for pedestrians in themselves… .
I don't need to cut back on defense at all, delve into the data and statistics and compare other countries in Southeast Asia and see that the Thai do it normally and don't spend too much at all. With a great danger in its backyard, Laos has already been subjugated and Chinese territory formally extends as far as Nong Khai due to 100% ownership of the railway in Laos and 50 meters around it on both sides. In addition, you have an incalculable neighbor Myanmar and a vassal state of Cambodia and that is why I think a strong army with a modest share in GDP is not wrong at all, you should not only look at the present, but also at the future from there. Then increase taxes, VAT and income taxes, and if you focus on the economy, the share of defense as a percentage of GDP will automatically decrease.