Cash-strapped government dips into its limited resources to deal with oil crisis

Thai officials have emphasised the urgent need to support affected sectors and vulnerable groups amid the current oil crisis, despite budget constraints.

The recently approved relief package aims to cushion the impact of rising fuel costs and stabilise the market during this challenging period.

A special Cabinet meeting on April 11 approved a 3.7-billion-baht relief package to help citizens and businesses cope with soaring oil prices triggered by the ongoing conflict in the Middle East.

The government also allocated 1.4 billion baht to supplement the state welfare card fund, to help ease the financial burden on vulnerable groups.

Finance Minister Ekniti Nitithanprapas, who is also a deputy prime minister, explained that the funds were sourced from the central budget and the special fund of the Ministry of Transport.

Despite having limited financial resources, the government has been compelled to act as public debt has risen quickly since the COVID-19 pandemic and consistent budget deficits. Public debt is approaching 70 per cent of gross domestic product (GDP), a key red line to maintain fiscal sustainability.

Authorities have introduced stricter fiscal measures and prioritised spending to curb further debt accumulation. These efforts aim to restore confidence in the country’s financial stability and ensure long-term economic resilience.

Ekniti emphasised that the measures were designed to mitigate economic risks, including stagflation—a combination of economic slowdown and high inflation—affecting all sectors.

The Cabinet’s key measures include support for vulnerable citizens, transportation, and farmers, as well as initiatives to encourage businesses and individuals to transition to clean energy. “These projects aim to minimize passing of costs to consumers and ensure comprehensive assistance for entrepreneurs and farmers,” Ekniti added.

Assistance for vulnerable groups

The state welfare card program will provide 13.22 million people with an extra 100 baht for purchase of consumer goods, raising the monthly allowance from 300 baht to 400 baht from April 13 to May 12. This temporary top-up costs the exchequer 1.3 billion baht and supplements the regular monthly budget for the welfare card.

To help the public adapt to energy market volatility, the Government Savings Bank (GSB) has launched a 5-billion-baht low-interest loan program for clean energy solutions. Individuals can borrow up to 2 million baht at special rates for purchases of solar panels or electric vehicles. Applications are open until March 31, 2027.

The Government Housing Bank is offering special loan programs for energy-efficient homes, including loans for buying, building or renovating properties equipped with renewable energy systems, and a dedicated solar-roof loan for welfare customers.

Support for farmers and the agricultural sector

The Bank for Agriculture and Agricultural Cooperatives (BAAC) is providing 30 billion baht in loans with co-payment interest rates to lower production costs, as well as training and improvement in fertiliser analysis. Farmers can borrow up to 100,000 baht at 6 per cent annual interest, with the government covering half if the criteria are met.

The project runs for three years and aims to boost farmers’ incomes and quality of life.

To help government contractors affected by the oil price surge, procurement criteria have been relaxed. Bid winners who are unable to sign contracts will not be penalised and will have their deposits returned. Temporary work stoppages or terminations are permitted for existing contracts, and deposits will be returned as appropriate.

Construction costs are now calculated based on updated diesel fuel prices (51.00–69.99 baht per liter), ensuring the budgets of government projects match market realities. The Budget Bureau has urged government agencies to expedite fund adjustments and review contract terms to reflect current economic conditions.

Measures for SMEs

The Ministry of Finance, in partnership with the GSB, has launched the Thai Business Revitalization Soft Loan project offering 100 billion baht to help entrepreneurs invest in green technologies and digital transformation. The SME Green Productivity loan from the SME Bank offers up to 30 million baht per borrower at 3 per cent interest for three years, supporting upgrades to energy-efficient processes and links to the EV industry.

The Export-Import Bank of Thailand’s “EXIM Support Plus” project provides working capital to exporters affected by higher transportation costs, with loans at 4 per cent interest and export insurance options at special premium rates to cover risks from the Middle East crisis.

Relief for transportation sector

Deputy Transport Minister Siripong Angkasakulkiat has announced a 2.1-billion-baht subsidy for fuel costs in the transportation sector from April 20 to May 31.

The breakdown includes 1.4 billion baht for large trucks, 97 million baht for motorcycle taxis, 81 million baht for passenger vans and minibuses, 9 million baht for public buses, 8 million baht for fuel-powered taxis, 311 million baht for non-regular route buses, and 200 million baht for Transport Company Limited to ease travel costs during the Songkran holidays.

Commerce Minister Suphajee Suthumpun, who is also a deputy PM, confirmed a central budget allocation of 260.6 million baht for various projects to offset the impact of the Middle East conflict.

These include the Green Flag Affordable Price Plus project for farmers, the Blue Flag project offering affordable goods and mobile vending shops, and the Thai Help Thai project to boost SME incomes.

The government will focus on stimulating the grassroots economy by improving liquidity and reducing costs for SMEs and community enterprises, starting in 2026.

Additional cost-saving measures

The Cabinet has instructed the Budget Bureau to reduce government spending by canceling overseas study trips and replacing them with domestic activities.

Agencies are encouraged to reduce energy consumption by allowing work-from-home arrangements for tasks that do not affect public services, aiming to enhance resource management efficiency.

“Trump’s moves are unpredictable. The Thai government needs to intervene in the oil market for the time being as the market has been disrupted by the Iran war,” says independent economist Prof Praipol Koomsup.

Many international analysts expect crude oil prices to remain high for an extended period—even if a ceasefire is reached between the US and Iran —because previous strikes have severely damaged oil and gas infrastructure in Gulf countries. As of April 15, oil prices ranged between 90 and 100 dollars per barrel.

Ekniti reaffirmed the government’s commitment to addressing the situation arising from the crisis. “The Ministry of Finance and related agencies are dedicated to swiftly mitigating the impact on small-scale farmers, citizens and entrepreneurs so that they can return to normal life and business as soon as possible.

Our goal is to create a supportive ecosystem for business growth and lay the foundation for sustainable recovery in all sectors,” he said.