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Thai cabinet approves borrowing of $22.3 billion for COVID-19 response


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2021-05-18T155502Z_1_LYNXNPEH4H0YG_RTROPTP_4_HEALTH-CORONAVIRUS-THAILAND-ICU.JPG

FILE PHOTO: An ICU nurse wearing personal protection equipment (PPE) attends to a patient suffering from the coronavirus disease (COVID-19) in the Intensive Care Unit (ICU) at the King Chulalongkorn Memorial Hospital in Bangkok, Thailand, May 11, 2021. REUTERS/Athit Perawongmetha

 

BANGKOK (Reuters) -Thailand's cabinet has approved further borrowing of 700 billion baht ($22.29 billion) to support the country's response to COVID-19, a government official told Reuters on Tuesday, as it deals with its biggest wave of infections so far.

 

The approval come a day after the state planning agency cut its 2021 economic growth outlook to 1.5%-2.5% from 2.5%-3.5% as the latest COVID-19 outbreak slowed a recovery.

 

The Southeast Asian country's latest COVID-19 outbreak has seen infections more than triple and deaths increase six fold since it started in April, following a year of success in containing earlier outbreaks.

 

The government's current 1 trillion baht ($31.83 billion)borrowing to mitigate the impact of the outbreak is close to completion.

 

The new borrowing would add further growth by 1.5 percentage points to Southeast Asia's second largest economy, the finance ministry said in a statement.

 

It is expected to increase the ratio of the country's public debt to gross domestic product to 58.56% at the end of September, from 54.28% as of March, still below its limit of 60%, the ministry said.

 

Earlier this month, the ministry said any further borrowing would be conducted carefully, taking into account financial conditions.

 

($1 = 31.40 baht)

 

(Reporting by Orathai Sriring, Panarat Thepgumpanat and Kitiphong ThaichareonWriting by Martin Petty; Editing by Steve Orlofsky)

 

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-- © Copyright Reuters 2021-05-19
 
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46 minutes ago, webfact said:

The new borrowing would add further growth by 1.5 percentage points to Southeast Asia's second largest economy, the finance ministry said in a statement.

Huh? You borrow money and you can see your economy grew? Is that what this is saying?

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Money well spent, they use to borrow billions every so often to buy new planes for Thai and prop up an ailing national money pit carrier, now it goes to a good cause...

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1 hour ago, mbenson said:

Huh? You borrow money and you can see your economy grew? Is that what this is saying?

Government expenditure has always been a component of GDP in every country, that's why it is important to also look at the borrowings side of the equation. In theory, the government could borrow a huge amount and see their GDP increase by several percent. But everyone would know where that GDP growth had come from and the currency would weaken as a result. As things stand today government borrowings are quite low, around 50% of GDP so there is plenty of scope to allow them to borrow more without doing any structural fiscal damage.

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Posted (edited)
1 hour ago, sammieuk1 said:

What's the generals interest rate the Swiss accounts must be taking a hammering 🤔

The Swiss have been more circumspect of late The  British Virgin Islands  has been the place of choice for years now and is where most corrupt Thais bury their ill-gotten gains

 

https://www.icij.org/investigations/offshore/mugabe-crony-among-thai-names-secret-offshore-files/

Edited by Excel
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4 hours ago, webfact said:

Thailand's cabinet has approved further borrowing of 700 billion baht ($22.29 billion) to support the country's response to COVID-19, a government official told Reuters on Tuesday, as it deals with its biggest wave of infections so far.

Keep the trough topped up.

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I don't see any other way for any countries not to borrow more to respond to the deteriorating economic situation due to covid-19. All the ASEAN countries will exceed their debt to GDP ratio even Singapore which has a 132% ratio. I just hope that all borrowings will be from the domestic financial institutions and avoid the external currency fluctuations like Indonesia who have to borrow USD250 millions from the World Bank. 

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Has ever anyone wondered, where all that money comes from which is presently burnt by this government?
I mean, three submarines which nobody needs (except the commission beneficiaries), airport extensions, highways for no cars (see Nong Khai with its second bypass albeit the first bypass, opened three years ago, is already under repair and hardly ever used), a highspeed rail link favouring the benefiting Chinese need to access the sea without paying for it etc. etc. 

Just wondering and being sort of confused 😉 

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53 minutes ago, Sydebolle said:

Has ever anyone wondered, where all that money comes from which is presently burnt by this government?
I mean, three submarines which nobody needs (except the commission beneficiaries), airport extensions, highways for no cars (see Nong Khai with its second bypass albeit the first bypass, opened three years ago, is already under repair and hardly ever used), a highspeed rail link favouring the benefiting Chinese need to access the sea without paying for it etc. etc. 

Just wondering and being sort of confused 😉 

It depends what the item is and how much it costs. Every year in September each government department starts a new budget year, they receive funds for that budget soon after, or whenever the budget is approved for disbursement. The new budget will have been summitted for approval earlier in the year so central government can understand the spending implications.

 

Airport extensions and highway expansions will be a part of business as usual and funding will come out of the annual budget, tax money in short. Military spending, which is typically around 3% of GDP in most countries, will fund new equipment purchases. Big ticket, one off expenses may be funded separately, either though direct loans with the supplier or other borrowings such as a bond issuance via the Ministry of Finance or the BOT. Just to give you an idea of the scale of things, tax revenue collection in 2019 was THB 2 trill, on top of which the government spent a further 0.82% of GDP as a budget deficit, that's another USD 4.4 bill. that's for everything spent by all departments. Thai GDP is about USD 540 bill.

 

 

Edited by Brierley
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