Thai Cabinet backs THB400 billion borrowing decree amid energy crisis

The Middle East war, now in its third month, has led the Cabinet to issue an emergency decree authorising the Ministry of Finance to borrow THB400 billion to address the impact of the energy crisis and the country’s energy transition.

Prime Minister Anutin Charnvirakul led the full Cabinet in announcing the resolution, citing the need arising from the Middle East conflict and its impact on energy prices.

The pressure began with energy prices before spreading to food prices and pushing up living costs, he said, adding that the government would curb the risk of the Thai economy entering stagflation, or high inflation alongside an economic slowdown.

The emergency decree has two objectives:

1. To ease the impact on people’s cost of living and ensure economic activity does not come to a halt.
2. To accelerate the restructuring of the country’s energy system to reduce vulnerability and address long-term problems.

The target groups are those requiring urgent assistance, including low- to middle-income people, farmers, small and medium-sized enterprises (SMEs), and economic sectors directly affected by energy costs.

Anutin said the government would use this opportunity to move towards a modern energy era by restructuring energy use and reducing dependence on fossil fuels, enabling Thailand to secure stable and competitive energy costs without facing the same volatility.

It would also develop human resources by upskilling and reskilling the manufacturing sector so it can compete internationally.

Government affirms fiscal discipline

Anutin said the government would strictly maintain fiscal and financial discipline.

Its approach to solving the problem would give Thai people greater strength to cope and support those with less means so they could get through the crisis together.

Ekniti Nitithanprapas, Minister of Finance, said the government had reduced the original borrowing amount reported in the news from THB500 billion to THB400 billion to maintain fiscal discipline and take into account concerns from all sectors.

He stressed that this borrowing was not only for relief, but also to create an opportunity for the country to adjust for sustainability.

“This crisis is severe, fast-moving and coming in five continuous waves: the war crisis, the energy price crisis, the production cost crisis, the cost-of-living crisis and the crisis of declining purchasing power.”

The borrowing amount will be divided into two main parts:

1. The first part, THB200 billion, will be used to provide relief and ease the impact on vulnerable groups of people and business operators.
2. The second part, THB200 billion, will be used for the transition to renewable and clean energy, reducing vulnerability from dependence on imported oil and natural gas, which will lower people’s expenses in the long term and prevent a repeat crisis.

The urgent need to issue an emergency decree instead of using the regular budget stems from the fiscal 2026 budget having insufficient remaining funds, with no more than THB50 billion actually available, while the central budget has only a little over THB20 billion left, which must be reserved for other emergencies.

The fiscal 2027 budget must wait another five months, making it too late for a crisis that could escalate into stagflation, or an inflation crisis layered on top of a purchasing-power crisis, making it a matter the government had to decide.

Finance Ministry insists public debt will remain below 70%

Ekniti said all borrowing would be domestic to demonstrate fiscal discipline.

There was currently THB1 trillion of liquidity in the banking system, and low interest rates meant there was no exchange-rate risk and limited borrowing-cost risk.

The Ministry of Finance assessed that, if the full THB400 billion were borrowed, public debt would stand at 69%, below the public debt ceiling of 70% of GDP.

On procedure, the emergency decree will be submitted to the House of Representatives on Thursday (May 14, 2026), together with the appointment of a committee to screen loan spending, chaired by the permanent secretary of the Ministry of Finance.

On the budget for the Let's go halves co-payment scheme or the state welfare card, the government will also consider other budget sources, aiming to begin implementation on Monday (June 1, 2026).

Finance Ministry to issue project-screening rules

Lavaron Sangsnit, permanent secretary of the Ministry of Finance, said the Ministry of Finance would next week issue two regulations on mechanisms for loan spending:

1. Regulations on the criteria for screening projects
2. Regulations on monitoring and evaluating the use of funds

The Ministry of Finance has also set the following implementation timetable:

• Thursday (May 7): a meeting of the Public Debt Management Policy and Supervision Committee to adjust the public debt plan
• Tuesday (May 12): the debt-incurrence plan will be submitted to the Cabinet meeting
• Thursday (May 14): the draft emergency borrowing decree will be submitted for explanation in the House of Representatives for its first reading
• Thursday (May 21, 2026): The draft emergency borrowing decree will be submitted for consideration by senators

“In an energy crisis like this, no country in the world uses a general energy price-support measure to prevent an impact on the public.

Every country lets prices float and uses the money for targeted relief measures in the same way as Singapore.”

The government also wants to accelerate the transition to clean energy within one year to build energy security and reduce long-term costs.

PDMO confirms borrowing mainly domestic

Jindarat Viriyataveekul, director-general of the Public Debt Management Office (PDMO), said borrowing would focus mainly on the domestic market and be carried out gradually as needed.

In the initial period, it would use short-term borrowing through term loans, whose current interest cost is low at 1.1%.

A Fiscal Policy Office (FPO) model estimated that the THB400 billion loan would add 0.8% to GDP in 2026, while inflation would be 1.5%.

The reduction of the borrowing amount to THB400 billion was also intended to maintain fiscal and financial discipline.

It would push the public debt-to-GDP ratio to a peak of 69% in fiscal 2027 before falling to 66% in fiscal 2031, still within the 70% sustainability ceiling.

Budgeting for principal and interest to start in fiscal 2027

Rachada Dhnadirek, spokesperson for the Prime Minister’s Office, said the Cabinet had assigned the Budget Bureau to allocate budgets from fiscal 2027 onwards to pay interest and expenses related to borrowing, issuance and management of debt instruments under this draft emergency decree.

The Cabinet also assigned the Office of the Public Sector Development Commission (OPDC) to discuss with the PDMO mechanisms for overseeing public debt risk management, monitoring, and evaluating projects.

The private sector says the key question is how the money will be used

Visit Limlurcha, vice chairman of the Thai Chamber of Commerce and president of the Thai Future Food Trade Association, told Bangkokbiznews that the more important question was how this pool of money would be used to deliver maximum benefit.

The government should have the following implementation plan:

1. In the short term, the state should first help vulnerable groups directly and precisely, including low-income people and small operators directly affected. Stimulus measures should be temporary, with clear targets and measurable results, so that the money genuinely circulates in the economy rather than being dispersed in spending that has a limited impact.
2. In the next phase, the money should be used to restructure the economy, because the current crisis is not merely temporary but a structural change in the global economy. Investment in clean energy, improving production efficiency, strengthening supply chains and developing digital capabilities is not merely a short-term fix but preparation for Thailand to compete in the long term.

ADB supports energy transition

Keiju Mitsuhashi, director of the Energy Sector Office at the Asian Development Bank (ADB), told Bangkokbiznews during the ADB annual meeting in Uzbekistan on Tuesday (May 5, 2026) that the bank was discussing support for Thailand’s energy transition with the Thai government.

In the past few years, however, ADB has not supported direct lending for energy sector development as it did in the past.

On the emergency borrowing decree under which the government has allocated THB200 billion for the energy transition, Keiju explained that the matter was not only about the energy sector, but about driving the entire economic system, affecting transport, industry and services by giving them access to stable, clean energy.