Thailand's government will expand its planned stimulus package to 300 billion baht ($8.6 billion) as it aims to boost its economy teetering on the brink of recession, Prime Minister Abhisit Vejjajiva said. The spending will come from additional budget increases, loans from state banks to shore up commodities prices and re-allocation of unspent funds from local governments, Abhisit told Reuters in an interview on Thursday.
"It is quite a big package," Abhisit said, adding the government would finalise the plan by mid-January. Earlier this week, Abhisit said the government planned to spend 200 billion baht early next year to help the economy, which the government has projected to grow a maximum 2 percent next year from an estimated 3 percent this year.
The double blow from the global slowdown and the blockade of Bangkok's airports by anti-government protesters during the peak tourist season has many economists drawing comparisons to the 1997-98 Asian crisis when the Thai economy shrank 10.5 percent. Abhisit's shaky multi-party coalition government has made reviving the economy its top priority, but analysts say he has little room to manoeuvre. Abhisit, an Oxford-educated economist, said the package would put more money in rural voters' pockets through the construction of more small roads and canals and shoring up farm products, namely rice and rubber - the two top crucial political crops.
The money would also be spent to re-train laidoff urban workers, whose factories were hit by export slumps, he said. Finance Minister Korn Chatikavanij said on Wednesday the country's export-driven economy would shrink in the fourth quarter and barely grow in 2009, mainly due to a global economic slowdown that is likely to get worse next year.
Out of the 300 billion baht package, the government would spend 100 billion baht in loans to state banks to support falling commodity prices and provide small and medium firms with liquidity, Abhisit said.