Cabinet approves 5-year fiscal framework with cap on quasi-fiscal policy and deficit limit of 3%

The Cabinet on Tuesday approved revisions to the medium-term fiscal framework (MTFF) for fiscal years 2026-2030, designed to support the government’s Quick Big Win strategy and strengthen Thailand’s long-term fiscal discipline.

The Cabinet instructed the State Fiscal and Financial Policy Committee, the Budget Bureau and the Finance Ministry to jointly refine the detailed guidelines, said Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas.

He explained that the MTFF is a core foundation of the government’s Quick Big Win policy, ensuring greater fiscal prudence. Key measures include tightening the use of the central fund, capping it at no more than 3% of total expenditure, and setting a minimum 4% allocation for public debt repayment. Mid-year requests for multi-year commitments will be capped at 5%.

Stricter control of quasi-fiscal policy

Ekniti addressed concerns over the use of quasi-fiscal measures under Section 28 of the State Fiscal and Financial Disciplines Act B.E. 2561. Previously, agencies submitted requests independently without a unified system. The Cabinet has now ordered the creation of a unified, transparent approval process. The existing limit — not more than 32% of recurrent expenditure — will remain, with the prime minister acting as final approver before proposals reach Cabinet.

Ekniti said the government aims to reduce the annual budget deficit to no more than 3% of GDP by FY2029, down from 4.4% set for FY2026.

Public debt will remain within the fiscal sustainability framework, capped at no more than 70% of GDP.

The Cabinet has tasked the Finance Ministry and the Budget Bureau with restructuring both revenue and expenditure. Targets include raising total revenue to at least 15.1% of GDP (up from 14.8%), and reducing government spending to around 18% of GDP (down from over 19%).

Despite tighter spending, public investment remains a priority. Ekniti said the government will use non-debt channels to enhance investment without increasing public debt — including the Thailand Future Fund, other infrastructure funds and public–private partnerships (PPP).

On November 19, the four key economic agencies — Finance Ministry, Budget Bureau, NESDC and Bank of Thailand — will begin drafting the FY2027 budget before presenting details to Cabinet.

FY2027 budget framework

Under the new MTFF, the initial FY2027 budget ceiling is set at 3.788 trillion baht, a slight increase of 7.4 billion baht or 0.2% from FY2026’s 3.7806 trillion baht.

Net revenue collection is estimated at 3 trillion baht, up 79.4 billion baht or 2.7% from FY2026.

Thailand will still run a deficit budget in FY2027, requiring borrowing of 788 billion baht, equivalent to 3.9% of GDP, which is 72 billion baht lower than FY2026’s deficit financing of 860 billion baht.