Key facts
- Thailand's Constitutional Court has ruled the government's emergency decree to borrow 400 billion baht ($12 billion) is legal.
- The borrowing aims to support households impacted by high oil prices and fund energy transition plans.
- The government plans to allocate 200 billion baht for direct relief and 200 billion baht for energy restructuring.
- The decree was issued due to insufficient funds in the current and upcoming fiscal budgets.
- The Ministry of Finance projects public debt will remain below the 70% of GDP ceiling.
Thailand's Constitutional Court has ruled that the government's emergency decree to borrow 400 billion baht ($12 billion) is legal, paving the way for measures to mitigate the economic impact of the Middle East conflict and advance the country's energy transition.
Prime Minister Anutin Charnvirakul's administration sought the emergency borrowing to address rising oil prices, which have fueled inflation and increased the cost of living. The government aims to prevent the economy from entering stagflation, characterized by high inflation and economic slowdown. The borrowing is split equally, with 200 billion baht designated for direct relief to households, farmers, small and medium-sized enterprises (SMEs), and affected sectors, and the remaining 200 billion baht earmarked for restructuring the nation's energy system towards renewables and reducing reliance on imported fossil fuels.
The government emphasized fiscal discipline, with the Finance Ministry stating that the borrowing would be domestic and that the total public debt is projected to remain below the 70% of GDP ceiling. The emergency decree was deemed necessary due to insufficient funds in the current and upcoming fiscal budgets. The opposition parties had challenged the borrowing, citing concerns about the country's fiscal space and the necessity of such a large debt issuance, particularly for financing the energy transition.
Finance Minister Ekniti Nitithanprapas highlighted the severity of the crisis, describing it as a five-wave challenge encompassing war, energy prices, production costs, cost of living, and declining purchasing power. He noted that Thailand's heavy reliance on imported oil makes it particularly vulnerable to global energy shocks. The Bank of Thailand forecasts economic growth to slow to 1.5% this year, with headline inflation potentially reaching 5% in the coming months.