Finance Ministry charts Thailand’s path through economic turmoil

The suggestions were presented during a talk held as part of the event "MOF Journey: 150 Years of Thai Fiscal Development” at the Queen Sirikit National Convention Centre in Bangkok on Saturday.

Aran Thammano, a former permanent secretary of the ministry, explained that in 1961, Thailand entered a phase where it began borrowing from international sources to fund national development projects.

To secure loans from institutions like the World Bank or the International Monetary Fund (IMF), a thorough feasibility study was required to ensure the investment’s value and sustainability.

He added that the Fiscal Policy Office (FPO), established during that period, played a crucial role in becoming a trusted and credible economic institution.

Aran served as the permanent secretary during fiscal years 1993 to 1995, when Thailand ran budget surpluses of 1.2%, 2.0%, and 2.6%, respectively. Additionally, more than 30% of total budget expenditure during those years was allocated to investment.

He recommended that the current Finance Ministry prioritise setting a tax-to-GDP target by broadening the tax base and reducing the budget deficit, suggesting an appropriate range of 18–20% of GDP.

Aran noted that Thailand’s economic growth potential is steadily declining. “The latest World Bank figure is just 3.5%, and economists estimate it could be as low as 2%,” he said. “If we could push growth to 5%, the country would fare much better.”

Chatumongol Sonakul, another former permanent secretary, recounted that he originally graduated in engineering but began working at the Finance Ministry when the FPO needed academics to conduct feasibility studies for international loans.

He recalled a major political scandal centred on a parliamentary debate over bribery allegations involving 10 MPs. During this period, while he was serving as permanent secretary, he was transferred to the Prime Minister’s Office.

He eventually resigned from the civil service in 1997, during the height of Thailand’s economic crisis, when the baht depreciated to 55 baht per US dollar. This crisis led to the removal of three consecutive governors of the Bank of Thailand (BOT).

“At that time, I was nominated to become the BOT governor, but despite my experience at the Finance Ministry, I had little knowledge of monetary policy,” he admitted.

One of Chatumongol’s proudest achievements, he said, was clearly separating fiscal policy from monetary policy — a move followed by most countries. Although the BOT and Finance Ministry often worked in parallel, their paths remained distinct.

“My major task was to ensure the BOT became truly independent from the Finance Ministry, with a governance structure that made the central bank autonomous,” he said.

Sathit Limpongpan, who also served as permanent secretary, shared that he began his career as a lecturer at Thammasat University before receiving a scholarship to study abroad and eventually returning to serve at the ministry. He assumed the post of permanent secretary in 2009.

During the 2008 global financial crisis, known locally as the “hamburger crisis”, he explained that the Finance Ministry had to respond swiftly to the economic contraction that hit the Thai economy. 

Under Prime Minister Abhisit Vejjajiva, the government introduced a short-term stimulus package, providing a cash handout of 2,000 baht per person, totalling 19 billion baht.

He emphasised the importance of targeting policies at vulnerable groups. At the time, the ministry collaborated with the Social Security Office (SSO) to distribute the funds to insured persons under Section 33, ensuring the support reached grassroots communities, he explained.

To support economic recovery, Sathit said the ministry collaborated with multiple agencies to launch infrastructure  projects worth 1.9 trillion baht. These included physical infrastructure like roads and airports, as well as institutional reforms such as civil service and regulatory development.

He noted that this initiative significantly improved Thailand’s infrastructure, providing both short-term relief and medium-term recovery. As a result, GDP rebounded with a 7.5% growth rate in 2009.

Sathit added that he was proud to have led property tax reform, including the introduction of the land and buildings tax, which helped decentralise fiscal authority to local agencies. He also promoted the establishment of the National Savings Fund (NSF) to ensure all citizens had access to retirement savings.

Lavaron Sangsnit, the current permanent secretary, affirmed the ministry’s critical role in driving Thailand’s economic and social development by managing the nation’s finances.

He said the ministry is now working to broaden the tax base. At present, state revenue collection accounts for only 12–13% of GDP, and the goal is to increase this to 18% to allow for a balanced budget.

“During recent crises, the Finance Ministry has played a key role in leading the country through difficult times, thanks to the dedication and integrity of its personnel and former secretaries,” he said.

Lavaron highlighted the ministry’s response during the Covid-19 pandemic, when it provided monthly relief payments of 5,000 baht for three months to those who lost their jobs. It was an enormous challenge, but we overcame it, delivering payments via the PromptPay system without any incidents of fraud, he said.