BANGKOK (Reuters) – Thailand’s cabinet on Monday approved a slightly higher budget of 3.2 trillion baht ($105.12 billion) for the 2020 fiscal year to bolster Southeast Asia’s second-largest economy, which is growing at its weakest pace in nearly five years.
The first reading of the bill in parliament is scheduled for next week, but it is not expected to be passed into law for four more months due to political delays. The fiscal year began on Oct. 1.
“The budget bill has been approved by the cabinet and it will be submitted to parliament today,” Prime Minister Prayuth Chan-ocha told reporters.
Overall spending will be about 7% higher than the previous year’s 3 trillion baht, with a deficit projected at 469 billion baht, or 2.6% of gross domestic product (GDP), up from the previous year’s 450 billion baht gap.
Government investments are projected at 656 billion baht, or 20.5% of all spending, up from last year’s 649 billion baht.
The budget bill is expected to be effective in early February, after gaining all approvals and the king’s endorsement in late January, Budget Bureau chief Dechapiwat Na Songkhla told Reuters.
The budget has been delayed because Thailand only had its new cabinet in July after March’s general election, though junta leader Prayuth, who took power in a 2014 coup, has stayed on as prime minister.
The budget bill needs to pass three readings in the lower house of parliament, in which the government has a fragile majority. The first reading is scheduled for Oct. 17-18, and second and third readings in early January.
Last week, Prayuth said he hoped the bill would be passed, otherwise “people in the whole country will suffer, farmers will suffer, not only me”.
Nomura economist Charnon Boonnuch in Singapore said the slim majority “poses some threat” to the bill being approved.
“Any failure will not only imply a further slowdown in government spending but also heightened political uncertainty,” he said.
Central bank Governor Veerathai Santiprabhob told Reuters on Friday that there were some projects such as public-private partnerships and investments by state-owned enterprises that were not constrained by the budget.
Like many of its trade-reliant neighbours in Asia, Thailand’s exports have been hit hard by slowing global demand and the escalating U.S.-China trade war.
While waiting for the new budget, officials have said there will be some funds carried over from the past year, while current expenditure can proceed as usual. The government has also asked state enterprises, which use a financial year, to speed up their investments.
The government in August launched a $10 billion stimulus package, and said it would introduce more.
The central bank recently cut its 2019 growth forecast to 2.8% from 3.3%. Last year’s growth was 4.1%, which lagged most regional peers.