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Thailand to add $3.4 billion to budget to fund cash handout plan
The Cabinet approved a budget increase for fiscal year 2024 on Tuesday to support a new handout stimulus program. The proposed increase is approximately 122 billion baht (US $3.36 billion).
Thailand is planning a supplementary budget of up to $3.4 billion to boost state spending and stimulate the economy. The budget will fund a digital wallet program, providing 10,000 baht to around 50 million Thais in the fourth quarter.
Key Takeaways
- Thailand is planning to boost state spending by $3.4 billion to implement a digital wallet program and provide cash handouts to 50 million citizens in an effort to stimulate the economy.
- The government’s decision to increase the budget for cash stimulus has been criticized for its potential inflationary impact and risk to fiscal consolidation.
- The supplementary budget will widen the fiscal deficit and be financed through a combination of wider deficit, extra revenue collection, and borrowing spread out over a few years to support the digital wallet plan.
The government aims to counter lower-than-expected economic growth and avoid a technical recession. The plan has faced criticism for potential inflationary effects and fiscal risks, but the government is prioritizing the cash stimulus to prevent delays in public expenditure.
The budget deficit will widen to support the stimulus, and the government aims to minimize impact on the bond market by spreading out borrowing.
The statement indicates that the budget deficit is expected to increase in order to provide support for the stimulus. This suggests that the government will be spending more money than it is taking in, leading to a larger deficit. The purpose of this deficit increase is to provide financial support for the stimulus measures, which are likely aimed at boosting economic activity and addressing any downturn in the economy.
Additionally, the government aims to minimize the impact on the bond market by spreading out its borrowing. This suggests that the government will seek to borrow funds over a longer period of time, rather than incurring a large amount of debt all at once. By doing so, the government may be attempting to avoid putting excessive pressure on the bond market, which could potentially lead to higher interest rates and other negative consequences.
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