The government yesterday approved a further 155 billion baht to help support an income guarantee scheme for farmers.
Speaking after a meeting of the State Monetary and Fiscal Policy Committee, chaired by Prime Minister Prayut Chan-o-cha, Finance Minister Arkhom Termpittayapaisith said the committee agreed to raise the ceiling of the state borrowing framework according to Section 28 of the State Fiscal and Financial Discipline Act -- currently capped at not more than 30% of the annual expenditure budget -- to not more than 35%.
Section 28 of the State Fiscal and Financial Discipline Act allows the government to borrow funds from state-owned financial institutions to be used for public expenditure to elevate the quality of life of the people or rehabilitate the economy. This is regarded as a semi-fiscal policy.
Previous governments have made use of this borrowing channel to finance several projects, especially assistance schemes for farmers.
The incumbent government has also tapped into this borrowing channel to finance the income guarantee scheme for farmers such as those cultivating rice and rubber.
The Yingluck Shinawatra administration had exercised the borrowing right under Section 28 of the act to finance its populist rice-pledging scheme which promised to pledge every single grain produced by rice farmers.
The scheme led to an accumulated outstanding balance under Section 28 accounting for almost all the 30% of annual expenditure budget, with only 5.36 billion baht left for the current government to be able to borrow.
Mr Arkhom said 5.36 billion baht is not sufficient to support the farmers' income guarantee scheme, noting the income guarantee programme for rice farmers alone requires an additional 76 billion baht, excluding a 50-billion-baht subsidy to be offered for rice farmers' production cost management.
According to Mr Arkhom, the state borrowing ceiling expansion in accordance with Section 28 will enable the government to borrow an additional 155 billion baht.
Combined with the outstanding balance of 5.36 billion baht, total borrowing under Section 28 will amount to 160 billion baht, he said.
However, the finance minister said raising of the ceiling will become effective for one year, and a revision needs to be decided on later by the State Monetary and Fiscal Policy Committee.
The Finance Ministry will seek the State Monetary and Fiscal Policy Committee's decision for the cabinet's approval at its next meeting next week.