Thailand passes delayed budget bill to revive economy

BANGKOK: Thailand’s parliament on Saturday passed a delayed draft budget bill for the 2020 fiscal year aimed at boosting South-east Asia’s second-largest economy, which is growing at its slowest pace in years.

The budget’s approval was key for the survival of the coalition government, which has a slim majority in parliament. A defeat would have forced former junta leader Prayuth Chan-ocha’s government to either resign or dissolve parliament.

After a four-day debate, the draft bill’s second and third readings passed with 253 votes. There were 196 abstentions in the 450-member parliament.

The proposed budget foresees a 7% rise in overall spending to 3.2 trillion baht (Us$105.89bil) for the fiscal year that began on Oct 1. It sets a deficit of 469 billion baht, up 4.2% from the 2019 fiscal year.

“The government will ensure that the approved budget will be used effectively for the country’s security and the people’s prosperity,” Prayuth told parliament.

The draft bill is expected to come into effect in February following a vote in the senate, which meets on Jan 20, and the king’s endorsement, Budget Bureau chief Dechapiwat Na Songkhla told Reuters.

Its passage was pushed back after delays in the formation of the cabinet following an election in March that saw Prayuth win another term as prime minister.

“The challenge here is how to speed up disbursement, which has been subdued since October due to the budget delay,” said Charnoon Boonnuch, an economist at Nomura in Singapore. More fiscal stimulus is needed to help economic growth, he said, adding two rate cuts by the central bank already pushed the key interest rate to a record low of 1.25% last year amid a deteriorating outlook.

He expected a further rate cut at the central bank’s policy review on Feb 5.

The central bank forecast economic growth at 2.8% for this year and 2.5% for 2019 – the slowest pace of growth in five years. — Reuters