Move Forward’s welfare policy 'won’t push up public debt'

The centre estimated that Move Forward’s welfare policy would cost around 650 billion baht, but the funds will be arranged from fiscal restructuring, expenditure, and taxes, without the need to obtain new loans. However, there are concerns about the party’s promise to raise the daily minimum wage to 450 baht, which may lead to a 0.6% inflationary pressure, the centre said.

The centre expects the formation of a new coalition government in August, which would delay the fiscal budget process by approximately 3-4 months, affecting state expenditure spending. Nevertheless, the government can utilise the existing fiscal budget.

According to Thitima Chucherd, head of the centre, if the minimum wage increases from 341 baht to 450 baht immediately, it would lead to a 0.6% inflationary impact. The centre estimates this year's inflation rate to be around 2.1%, but it is not expected to be significantly high unless there are additional factors exerting pressure.

While the Move Forward Party's aim to break up monopolistic, or oligopolies to promote more competition can benefit small businesses, larger businesses such as the alcohol industry and private power plants will be affected. As for public debt, it tends to increase in every new government formation. However, the higher costs associated with the proposed progressive welfare policy of the Move Forward Party, amounting to 650 billion baht, will have to be funded from fiscal restructuring and taxes. Therefore, the centre estimates that public debt will not increase as the government will not to seek new loans, Thitima said.

The centre, however, has revised down the global economic growth projection for this year to 2.1% from 2.3% due to worse-than-expected economic indicators in the second quarter. The recovery of the manufacturing and service sectors still varies, and the low downside risks may further dampen the global economic recovery in the remaining period of the year, according to Thitima.

For example, the lending standards are continuously tightening, and the profit generation capacity of businesses is under pressure from reduced demand, inflation, high interest rates, and declining economic confidence. Additionally, there are political tensions that may intensify and pose significant risks, Thitima said.