Cabinet approves 400-billion-baht loan decree to tackle energy crisis

The Cabinet on Tuesday (May 5) approved a draft emergency decree authorising the Finance Ministry to borrow up to 400 billion baht to address the impact of the energy crisis and support Thailand’s energy transition.

Speaking after the Cabinet meeting at Government House in Bangkok, Prime Minister and Interior Minister Anutin Charnvirakul said the decision was necessary because conflict in the Middle East had severely affected energy prices and economic activity worldwide.

He said the crisis, which began with surging energy prices, had spread to food prices and was putting pressure on the cost of living for Thai people. He stressed that the situation was not a normal one that the government could ignore.

“The government’s duty is to prevent the risk of the Thai economy entering a period of high inflation combined with slowing growth, or what is known as stagflation. This must be done in a timely manner,” he said.

The prime minister said the emergency decree had two main objectives: first, to ease the impact on people’s living costs and help prevent economic activity from stalling; and second, to accelerate the restructuring of Thailand’s energy sector to reduce vulnerability and provide a long-term solution.

The assistance will target groups in urgent need of support, including low- and middle-income earners, farmers, small and medium-sized enterprises (SMEs), and sectors directly affected by higher energy costs.

The measures will be carried out in two directions at the same time: reducing living costs and cutting production costs. These include support for fertiliser and other agricultural inputs for farmers, as well as measures to help the country shift towards a modern energy era.

Anutin said the government would use this opportunity to move Thailand into a new energy age by restructuring national energy use and reducing dependence on fossil fuels.

He said the goal was to give Thailand stable and competitive energy costs, while reducing exposure to the same kind of volatility in the future. The plan will also include human-resource development through upskilling and reskilling workers in the production sector to strengthen Thailand’s international competitiveness.

Anutin insisted that the government would continue to strictly maintain fiscal discipline. He said the measures might not end the global crisis, but they would help Thai people become more resilient and support those with fewer resources so they could get through the crisis together.

“We are all very pleased today to demonstrate our intention and commitment to stand alongside the people in solving the problems caused by the volatility of the world situation at present,” Anutin said.

Borrowing plan will be submitted for urgent legal review

Ekniti Nitithanprapas, Deputy Prime Minister and Finance Minister, said the draft would be submitted to the Office of the Council of State for urgent review, with the government describing it as a key shield against a fresh round of economic pressure.

He noted that Thailand was currently facing pressure on two fronts: rising energy and goods prices on one side, and weakening public purchasing power on the other. These conditions could increase the risk of stagflation, in which economic growth slows while inflation remains high.

He said the changing global order meant oil prices were unlikely to return to previous levels. As Thailand is among Asia’s most energy import-dependent countries, relying solely on normal fiscal measures under the annual budget framework would be too slow and insufficient in terms of scale, speed and flexibility.

A special law was therefore urgently needed to protect economic stability, he said.

Ekniti explained that the 400-billion-baht loan would be divided equally into two main programmes.

The first programme, worth 200 billion baht, will support the grassroots economy and SMEs. It will focus on easing living costs and sustaining economic activity, with targeted assistance for low- and middle-income earners, farmers and SMEs. The aim is to reduce costs, prevent repeated economic shocks and allow businesses to continue operating without disruption.

The second programme, also worth 200 billion baht, will support structural changes towards clean energy. It will promote reduced reliance on fossil fuels and the transition to alternative renewable energy. The measures will cover support for environmentally friendly vehicles, the installation of charging stations, greenhouse-gas reduction to generate carbon-credit income, and the development of skills and innovation to support the new economy.

Loan disbursement will be overseen by a screening committee chaired by the permanent secretary of the Finance Ministry, Ekniti said.

He added that the programme would be driven by the “5T” principles: Target, ensuring measures reach the intended groups; Transition, accelerating the energy shift; Transformation, driving structural change; Transparent, ensuring accountability and scrutiny; and Together, encouraging cooperation across all sectors.

Ekniti said the emergency loan decree was designed to address structural problems while also easing hardship for the public. He said it would help reduce costs for businesses, strengthen energy security and attract new investment into the economy.

On fiscal stability, the finance minister confirmed that although the borrowing would raise the public debt-to-GDP ratio, public debt would remain below the legal ceiling of 70%.

The government had a clear and transparent debt repayment plan, with interest rates remaining at a manageable level, he said, adding that the borrowing would also be carried out strictly under the State Fiscal and Financial Discipline Act BE 2561 (2018).