By Wichit Chaitrong
The Cabinet also approved the four-year fiscal plan for fiscal years 2021 to 2024 proposed by the Finance Ministry, Government Spokesperson Narumon Pinyosinwat said.
Under the plan, the Finance Ministry projects economic growth rate at 3.1 to 4.1 per cent in 2021, or 3.6 per cent boosted by domestic demand.
The headline inflation rate is expected to be in the low range of 0.7 to 1.7 per cent.
The government has forecast that the economy will expand by 3.4 to 4.3 per cent between 2022 and 2024, or growth could accelerate to 4 per cent between 2023 and 2024. The growth recovery is based on assumptions of accelerating private investment, expansion of exports and progress of government investment in infrastructure projects.
Private consumption is expected to expand due to rise in income and recovery of the global economy in 2021. Due to the economic recovery, it would pull inflation up to about 1.4 per cent in 2022, then 1.5 per cent in 2023 and 1.7 per cent in 2024.
The movement will continue to run fiscal deficits but the gap between revenue and spending is expected to narrow between 2021 and 2024.
New sources of income are expected from rising taxes on consumer products harmful to health, environmental impact, e-commerce, bond transactions, transfer pricing, and revision of tax exemption for individuals.
The government has vowed to adopt a conservative approach to public debt management. As of the end of August, public debt totalled Bt6.9 trillion, equivalent to 41.2 per cent of GDP.
The government, however, has not determined when it can achieve a balanced budget. The central bank has forecast the economy to expand 2.5 per cent this year and 2.8 per cent next year, the slower growth affected largely by the global slowdown.
Meanwhile, BOT deputy governor Mathee Supapongse said that Thai inflation was on a declining trend -- it was 2.5 per cent between 2000-2007, 2.7 per cent during 2007-2013 and 0.6 per cent from 2014-2019.
The BOT and the Finance Ministry have adopted an inflation target in the range of 1-3 per cent for next year, shifting from the annual target of 2.5 per cent, and minus or plus 1.5 per cent that had been adopted since 2015. The range target will provide flexibility to implement monetary policy and if inflation diverges from the target range, the central bank's Monetary Policy Committee will report the situation to Finance Minister.
“Adopting a new approach on inflation targeting does not mean the central bank will change the direction of monetary policy. The central bank will continue its easing of monetary policy for a while in order to accommodate economic growth,” he assured.