Bangkok: Pakorn acknowledges the government's preparation to issue an emergency decree to borrow 500 billion baht, emphasizing the urgent need to address the multiple crises.
According to Thai News Agency, Pakorn acknowledged that the government is preparing to issue an emergency decree to borrow 500 billion baht, citing the urgent need to address the compounding crises of high energy prices and the super El Ni±o that Thailand will face. Regarding the issue of raising the public debt ceiling, the Ministry of Finance will make the final decision.
Deputy Prime Minister Pakorn Nilapraphan revealed that the government is considering issuing an emergency decree to borrow 500 billion baht in preparation for potential crises. He explained that issuing emergency decrees is a constitutional right of the government to address crises. Article 172 states that emergency decrees can be issued in urgent cases for national security or economic reasons. However, legally, once the emergency decree is issued, it must be presented to the House of Representatives for consideration as soon as possible.
Regarding the legal rationale for issuing the emergency decree, Mr. Pakorn explained that it was necessary due to the urgent and emergency situation. The current treasury reserves are quite low and tight, while the country faces risks on all sides, especially unpredictable external factors such as war and environmental crises like the Super El Ni±o phenomenon, which will have a widespread impact on agricultural production and the economy. Therefore, the government needs reserve funds to prepare for these emergency situations.
"In practice, even if the actual borrowing doesn't reach the full 500 billion baht, according to the principles of public debt management, the government needs to extend the debt ceiling to the full amount stipulated by law first," Mr. Pakorn said. He added that the issuance of a budget transfer act can be done concurrently to provide the government with a source of funds to cope with any potential crisis.
The issuance of an emergency decree for borrowing will have to be done after the public debt ceiling has been raised from the current 70%. Currently, the debt is at approximately 66% of the gross domestic product (GDP). It is necessary to raise the ceiling, but the exact amount will be finalized by the Ministry of Finance to accommodate the new borrowing amount, as current fiscal space is becoming limited.
Furthermore, Mr. Pakorn provided information on the legal status of the Fuel Oil Fund. Regarding the proposal to issue an emergency decree allowing the Ministry of Finance to guarantee a loan of 150 billion baht from the Fuel Oil Fund, he stated that the necessity of this is still under consideration. He explained that, according to its original objective, the fund was established as a tool for stabilization to temporarily mitigate energy price fluctuations. Ideally, the revolving fund should only hold 20-40 billion baht.
However, in the past, the fund has been used to subsidize prices for an extended period, deviating from its original purpose and resulting in accumulated debt exceeding one hundred billion baht. If further liquidity injection is needed in the future, the government will need to reconsider the legal aspects and the situation of the oil fund to align with the economic conditions and potentially rising energy costs.