First Cabinet meeting to consider 150bn-baht oil fund guarantee
The Energy Ministry will ask the first Cabinet meeting to back a decree allowing the Finance Ministry to guarantee a 150-billion-baht Oil Fuel Fund loan for one year.
Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas on Tuesday said he had instructed Finance Ministry representatives serving as directors on oil companies and refineries to strictly supervise and inspect operations to prevent oil hoarding.
He also told the Customs Department and the Excise Department to tighten controls against any illegal export of oil to neighbouring countries, as fuel prices in Thailand are lower than those in neighbouring markets.
On measures to ease the burden on the public, Lavaron Sangsnit, permanent secretary for finance, said that at the first Cabinet meeting the Energy Ministry would propose the issuance of an emergency decree authorising the Finance Ministry to guarantee borrowing by the Oil Fuel Fund to boost liquidity and cope with global oil price volatility caused by the Middle East situation.
The proposed framework would cover 150 billion baht for a period of one year.
Lavaron said the emergency decree would be counted within the public debt ratio if the fund proceeded with borrowing. However, he insisted that the government still had enough fiscal room to cope with the current crisis.
At present, public debt stands at 66% of GDP and, even if the 150-billion-baht loan guarantee for the Oil Fuel Fund is included, the government would still have room to implement further policy measures worth more than 300 billion baht.
“Based on a preliminary assessment, the 150-billion-baht framework should be able to support the energy crisis arising from the Middle East situation. During the earlier Russia-Ukraine crisis, the government also issued a decree guaranteeing 150 billion baht in borrowing. At that time, the Oil Fuel Fund had a deficit of more than 130 billion baht, and the measure was sufficient,” he said.
As for a cut in excise tax, which is currently levied at 6-7 baht per litre, he said the government still needed to decide which policy mechanism Thailand would use to provide support.
There are two possible mechanisms: the Oil Fuel Fund and oil tax measures. Either way, the outcome would be the same — helping to ease the burden on the public.
