THAILAND is planning a larger budget deficit of 713 billion baht (S$27.3 billion) for the 2025 fiscal year and higher spending of 3.6 trillion baht that year, the government said, in a plan that would see a rise in spending over the next two years.

The government predicts gross domestic product (GDP) growth of 3.6 per cent in 2025, it said on Dec 26, the day when the plans were approved by the Cabinet without being fully, proactively divulged. The 2025 fiscal year starts on Oct 1, 2024.

“The government still needs a short-term deficit budget to support continued economic expansion and stability,” the authorities said.

The plan projects inflation of 1.5 to 2.5 per cent in 2025, it said, and a public-debt-to-GDP ratio of 63.73 per cent at the end of the 2025 fiscal year.

The 2025 budget plan would increase spending from the 3.48 trillion baht planned for the 2024 fiscal year, when spending is also set to increase from 2023.

The deficit would increase in 2025 after a slight drop forecast in the 2024 draft budget.

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The 2024 budget has been delayed from the original Oct 1, 2023 start date due to an election in May, and a long period under a caretaker government.

On Tuesday, the Cabinet approved the draft budget bill for the 2024 fiscal year, which will go to parliament for the first reading next week. REUTERS