Thailand Finance Ministry sees loan decree averting SME closures

An emergency decree authorising the Finance Ministry to borrow THB400 billion is being framed by the government as a response to fragile economic security.

The government says oil prices will not return to previous lows after the war, while energy and supply chain risks remain high throughout what it describes as a “Security First” era.

Thailand’s risks stem from oil and gas consumption worth as much as 11% of GDP, while the net energy trade balance shows a deficit of up to 6% of GDP.

The country also relies on energy imports for 90% of total demand.

The Finance Ministry insisted on the need to issue the borrowing decree, saying the fiscal 2026 budget had already been fully allocated and the legal ceiling for deficit-financing borrowing was nearly exhausted.

Existing budget management remained insufficient, including the central emergency budget and the draft Budget Transfer Act, while an urgent crisis required immediate funding and could not wait because the fiscal 2027 budget would take another five months.

Ekniti Nitithanprapas, Minister of Finance, said Thailand needed to reduce its dependence on energy imports because its energy risk was higher than that of other countries.

If the war crisis dragged on, he said, it would hurt the public in repeated waves, making it necessary to accelerate restructuring to reduce long-term impacts.

The decree, therefore, covers a THB400 billion borrowing limit, with both relief measures and the energy transition needing to move ahead together.

The need for the THB400 billion borrowing decree comes as Thailand and the world face a crisis affecting economic security that is clearly different from the 1997 economic crisis.

The 1997 crisis was caused by the currency and the collapse of financial institutions, but this crisis concerns the cost of living and rising living expenses worldwide, which are the foundation of economic security that the government must urgently take responsibility for.

“Ekniti” says the crisis must be stopped from today

If the government does not act today, the crisis will become severe and arrive in several waves, with clear signs from three main waves: the war crisis, the energy and oil price crisis, and the crisis of production costs and rising inflation.

If the government does not stop the crisis from today, people’s incomes will shrink, and small businesses, or SMEs, will be unable to stand.

The impact will become severe and turn into an unemployment crisis, which is why the government must insist on the urgent need to issue this decree to stop the crisis.

The borrowing decree has already taken effect, and the government will start work immediately under the objectives of the THB400 billion budget, divided into two parts to achieve two goals at once: relief to ease the immediate impact of rising living costs, and adaptation and transition to strengthen the public.

“Pakorn” says the decree falls within executive power

Ekniti said Pakorn Nilprapunt, Deputy Prime Minister for legal affairs, had explained the legal issues to the Cabinet, saying the borrowing decree took effect one day after publication in the Royal Gazette.

As for the issue of filing a case with the Constitutional Court, the Constitution allows such a filing only on issues related to economic security, which corresponds to Section 172, while the issue of urgent necessity is considered an executive power.

The Cabinet discussed that any lawsuit could be filed only under Section 172 on economic security.

The government insists that the cost-of-living crisis and people’s livelihood problems, which are being faced worldwide, are issues affecting economic security.

However, the government continues to give the highest priority to maintaining fiscal discipline, insisting that it will not expand the public debt ceiling, which is set at 70%.

An initial borrowing amount of as much as THB500 billion had been proposed, but it was cut to THB400 billion to keep the debt from exceeding the ceiling and to maintain fiscal stability.

“If state-enterprise debt and the Financial Institutions Development Fund are excluded, the government’s public debt is about 60% of GDP. When included, it is now 66% of GDP, still under the government’s debt ceiling of 70% of GDP.”

R&I maintains Thailand rating at “A-”

Foreign confidence in Thailand is reflected in the latest report by R&I, or Rating and Investment Information, a Japanese credit rating agency, which announced that it had maintained Thailand’s rating at A- with a stable outlook.

“For the revised debt management plan, the first round of borrowing of more than THB200 billion will begin. The government will borrow gradually according to project needs to avoid borrowing money and leaving it idle, which would make the state pay interest for no benefit.”

Revised public debt plan to be proposed to the Cabinet

The Finance Ministry is preparing to propose the second revision of the public debt management plan for fiscal 2026 for Cabinet consideration next week.

It will be considered alongside the Thai Helps Thai Plus scheme, which combines the former Khon La Khrueng Plus scheme with state welfare to integrate assistance for the public.

Ekniti confirmed that the project timeline remained unchanged, with first-phase registration to begin on Monday (May 25, 2026) and spending rights to begin on Monday (June 1, 2026) for two months, followed by a second phase for another two months.

The number of eligible recipients is still under consideration.

Ploytale Laksamee Sangchan, Deputy Government Spokesperson, said the Cabinet had approved the annual expenditure budget for fiscal 2026 from the central budget, under the emergency or necessary reserve item, amounting to THB1.66768 billion, as spending for welfare provision to state welfare beneficiaries.

The Prime Minister also approved the Office of the Permanent Secretary for Finance, for the Pracharat Welfare Fund for Grassroots Economy and Society, to spend THB1.66768 billion from the annual expenditure budget for fiscal 2026 under the central budget’s emergency or necessary reserve item.

SMEs hope the loan will address five crises

Sangchai Theerakulwanich, strategy chairman of the Federation of Thai SMEs, told Krungthep Turakij that SMEs’ hopes for the THB400 billion borrowing decree were that it would help ease economic impacts, and that the government must give priority to “five main crises”, comprising:

The energy crisis, which affects both oil prices and electricity charges.

The most important point may not be the budget, but a review of energy cost and price structures so they reflect fairness for operators, farmers and the public, to create a fair and competitive energy pricing standard.

The economic supply-chain crisis, caused by rising logistics costs and higher costs of goods and services, is forcing operators to pass the burden on to product prices.

This affects people’s cost of living, purchasing power and inflationary pressure.

The unemployment crisis and a shortage of labour skills are aligned with the modern economy.

Thailand must systematically upgrade its workforce through lifelong learning, covering all age groups, aiming for high-skilled and highly productive labour.

The debt crisis, with SMEs facing tight liquidity, accumulated bad debts and a spillover into informal debt, is turning into an economic trap from which recovery is difficult.

The state may therefore need to consider a mechanism similar to a land bank to restructure secured informal debt, help restore the potential of farmers and SMEs, reduce debt burdens, and accelerate adaptation to increase competitiveness, create occupations and generate income resilient to changes in the global economy.

The crisis of state regulations, with Thailand needing to urgently improve laws, trade rules and the investment system to support business operations, while plugging economic loopholes.

Sangchai said the most important issue was for the government to build public trust in the use of this borrowing.

It must act with care, prepare a national strategy in advance, and put management systems in place before a severe crisis occurs.