PM warns of stagflation risk, fast-tracks B400bn loan

Prime Minister Anutin Charnvirakul has stressed the urgent need for the government to secure a 400 billion baht in loan to prevent the national economy entering stagflation in the wake of the global oil crisis, triggered by the war in the Middle East.

He made the statement today in front of his Cabinet ministers, after they approved the Finance Ministry’s executive decree to seek a 400 billion baht in loan from domestic sources, to ease the impacts of the oil crisis and the transition from fossil fuels to alternative clean energy.

The prime minister said that the oil crisis has already driven up food prices and increased the cost of living. “This is not a normal situation and the government cannot afford to wait,” said the prime minister, adding that his government has decided to pre-empt stagflation.

He also said that the borrowed money will also target low-income earners, farmers, SMEs and other sectors of the economy which have been directly affected by the rising energy prices.

The prime minister maintains that the decree constitutes a special tool with which the country can navigate through the oil crisis and set the groundwork to reduce future economic volatility while maintaining fiscal discipline.

Meanwhile, Finance Minister Ekniti Nitithanprapas offered an assurance that Thailand’s public debt remains below 70% of GDP, despite the 400 billion baht in additional borrowing, adding that the loan is also necessary because there is only 50 billion baht left in the current budget plus another 20 billion baht in the Central Fund.

Waiting for the 2027 fiscal year’s budget will take another five months, which would be too late to address the crises, said the minister.

He claimed that Thailand’s banking system has combined liquidity in excess of one trillion baht and interest rates remain low, so there is no risk of exchange rate fluctuations.

Ekniti explained that the Thai people have encountered consecutive crises resulting from the Middle Eastern war, including the oil crisis, a production cost crisis, a cost of living crisis and power purchasing crisis.

He explained that the amount of the loan was reduced from 500 billion baht to maintain fiscal discipline. The loan, he said, will be divided into two portions. The first is to help ease the impacts on the people and the second is to facilitate the transition from fossil energy to alternative and clean energy.