BOT Governor Sethaput Suthiwartnaruepu said on Monday that the prolonging and escalation of the pandemic had hit small and medium-sized operators and people who had lost their jobs the hardest.

“The government reserves will not be enough to stimulate the economy to recover in time and this will leave a huge economic scar that will hinder the country’s economic growth even after the outbreak ends,” he warned.

“The government therefore needs to borrow at least THB1 trillion, or 7 per cent of GDP, and inject it into the economy, which will make long-term public debt decrease faster than not adding the money at all.

“The central bank estimates that public debt will peak at 70 per cent of GDP in 2024 and then start to decline due to economic recovery,” said Sethaput.

“By borrowing THB1 trillion, public debt should remain stable at 62.6 per cent of GDP by 2031. However, without the THB1 trillion injection, the public debt in 2031 could remain at 67.6 per cent.”

Sethaput added that borrowing THB1 trillion would need a specific plan to make the country’s finances stronger again, and one of the main measures would be to increase taxes, especially the value added tax (VAT).

“Increasing VAT is unavoidable since Thailand has kept it at 7 per cent since the financial crisis in 1997 when it should have been 10 per cent,” he said.

“By increasing taxes, it is estimated that the government would have an additional income of THB60 billion per year.”