Thailand to borrow US$12.2 billion as Middle East crisis bites

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BANGKOK: Thailand approved a US$12.2 billion emergency borrowing package on Tuesday (May 5) to cushion the economic impacts of the Middle East war, marking one of the country's largest borrowing plans in decades.

The cabinet said the funding would be used to boost domestic spending and ease economic hardships as inflation rises and growth slows, with the finance ministry last week cutting its GDP growth forecast to 1.6 per cent, from 2.4 per cent last year.

The loan of about 400 billion baht will be deployed from June to September, and include aid for more than 20 million low-income people under the government's "Thais Helps Thais" scheme to ease living costs.

It will also be used to support alternative energy, Finance Minister Ekniti Nitithanprapas said at a news conference after a cabinet meeting.

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The US-Israel war against Iran that began in late February has roiled global energy prices, resulting in rising prices for oil and gas, shipping and consumer goods.

Prime Minister Anutin Charnvirakul called the loan "a tool to move the country forward and prevent economic weakening".

"We will get through this crisis together," he told reporters.

The borrowed sum is among the highest in recent history, but below levels seen during the 1997 Asian financial crisis and the COVID-19 pandemic years.

Public debt stood at 66.38 per cent of the country's GDP in March, below the 70 per cent ceiling, and the new loans will not breach the limit, the finance minister said.

Thailand's core inflation was forecast to hit 3.0 per cent this year, up from an earlier estimate of 0.3 per cent.

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