Bangkok: Stop fearing hitting the debt ceiling! Former Finance Minister points to a way out of a crisis bigger than COVID, along with a warning: "If you're going to do it small, don't do it at all; you'll regret it." In a world facing extreme volatility, Sommai Phasi, former Minister of Finance, offered an insightful perspective on Thailand's economic situation. He stated that the current conflict represents the biggest crisis since World War II, surpassing the Korean War, the Vietnam War, and even the COVID-19 pandemic.

According to Thai News Agency, Sommai analyzed that crude oil prices will remain high at around $80-90 per barrel and will not easily return to $60. The worrying aspect is that the prices of all oil-related products will inevitably rise, from fertilizers and chemicals to plastic pellets and everyday consumer goods like shampoo and detergent, affecting people at all levels.

Sommai's most important proposal was to employ a "critical, all-out economic policy," emphasizing that small movements would be ineffective and a waste of resources. The government needed to dedicate all its resources, both fiscal and monetary, to raising the incomes of citizens, SMEs, and Thai businesses amidst the crisis. He suggested reducing excise tax on fuel as a first step, increasing budget expenditures to help vulnerable groups, and raising minimum wages to help workers cope with rising living costs.

The former Finance Minister stated that the 70% public debt ceiling should not become a "haunted ghost," as many developed countries have much higher debt levels than Thailand. He urged that Thailand should dare to borrow money from abroad at low interest rates to fund development and resolve crises.

Sommai believes the Bank of Thailand has strong international reserves of up to US$300 billion, or half of GDP. He suggested using this as a basis for borrowing low-interest loans from abroad to stimulate the economy and help SMEs.

Another challenging issue is raising the Value Added Tax (VAT), which Thailand has kept at 7% for over 40 years. Mr. Sommai proposes increasing it to 8% by 2027 and to 10% subsequently, as previously studied by the IMF. He argues that a small tax increase will not collapse the economy, and the massive influx of tourists visiting Thailand will help absorb this tax burden, generating significant revenue for the government.

This economic war requires courageous decision-making. Half-hearted policies will not save the country. The government and the central bank need to coordinate closely to utilize all available tools to their fullest potential.