The 2026 Budget Bill Passes First Reading

And an update on Bhumjaithai-Pheu Thai conflict

The national budget for the 2026 fiscal year passed its first reading yesterday, with 322 MPs in favor and 158 against. It’s not yet over, of course: while the first reading approves the broad strokes of the budget, the details of the budget will be deliberated further during the second reading, and then there will need to be final approval at the third reading. The Senate will also get a say. But as one of the potential flashpoints in the “sixty days of danger” that the Pheu Thai government faces, Prime Minister Paetongtarn Shinawatra will probably breathe a sigh of relief that with such a comfortable margin, at least the budget has not yet become a cause for concern.

The FY2026 Budget in Brief

• From the Budget Bureau: The government unveiled a 3.7 trillion baht budget, composed of government revenue of 2.9 trillion baht; the 860 billion baht deficit will be made up with borrowing. (Thai public debt currently stands at 64.4% of GDP). The budget was formulated according to the assumption that GDP will grow by 2.3-3.3% in 2026.

• The budget is allocated towards the following objectives as follows: national security (11%), building competitiveness (10.5%), developing human resources (16%), building opportunity and social equality (24.9%), supporting environmentally-friendly quality of life (3.9%), balancing and developing public management (16%), and other public expenditures required (17.7%).

• Approximately 2 trillion baht is allocated for government expenditures that correspond to the current government’s policy priorities, including 368 billion baht for urgent policies and 1.7 trillion baht for medium to long-term policies.

• The Prime Minister said during her speech to parliament that 70.2%of the budget is allocated towards regular budgetary expenses, while 22.9% is allocated towards investment. 3.3% will be for expenses to repay the treasury, and loan principal expenses account for 4.0%

• Per The Nation, the Finance Ministry is set to receive the most funding (397 billion baht), while the Education Ministry will receive 355 billion baht and the Interior Ministry will receive 301 billion baht. Defense will receive 204 billion baht.

In her closing remarks after the budget’s passage, Prime Minister Paetongtarn said:

The government is aware that this budget was drafted under budgetary restrictions, trade restrictions imposed by major economies, geopolitical conflict, and climate change, including the global economic situation that has had a holistic impact…

…The government will dedicate its efforts in policymaking to all policies that will stimulate the economy in concrete ways. We will reduce the expenses of the people, increase income, and expand opportunities, including using the money from this budget to maximize the benefits to the people.

Leader of the Opposition: Government “Lacks Direction”

The Leader of the Opposition, People’s Party leader Natthaphong Rueangpanyawut, laid out a scathing attack on the government’s proposed budget in his speech to parliament. He criticized the Pheu Thai government for running a high deficit over the past two years, pushing public debt to its highest level in 36 years.¹ “What is more concerning, however,” Natthaphong said, “is not borrowing, but the fact that the government is overspending without a plan for investment and revenue generation, without a strategy, without connecting with how to build the government’s capabilities in the future. There is only repeated borrowing for the same old projects that don’t create revenue for the country.” He went on to argue that the government was too stuck in bureaucratic management and too distracted by coalitional infighting.

The government, Natthaphong said, was too stuck in old budgetary mindsets, with the agricultural budget being used for relief rather than investment, the soft power budget splurged on public relations events, and the environmental budget spent on quick fixes rather than structural issues. As part of his case for skepticism about the government’s ability to use the money effectively, he explained that in the last fiscal year, the cabinet had announced that they would use money originally intended for the 10,000 baht digital wallet scheme for short-term public investment instead. “This may look like khid mai thum mai², but when you look at the actual management, it reinforces the fact that the government has nothing in their heads. This was just allocating the budget to 7,850 local government authorities to send in requests within three days.”

Interestingly, Natthaphong referenced Why Nations Fail in his speech. (See here for my thoughts on Thailand’s national conversation on this book). The current crisis is not a fiscal crisis but a political crisis, he said, because Thailand’s institutions had turned extractive. From almost becoming the fifth Asian Tiger, Thailand was turning into something closer to a failed state. “Thailand is not a fully failed state, but the people’s confidence in this government has certainly failed.”

In response, Finance Minister Pichai Chunhavijara argued that Thailand’s debt-to-GDP ratio was still “acceptable.” On the topic of why a budget deficit was needed, he explained that Thailand is “still a growth country” and that the budget deficit was necessary while Thailand is restructuring its economy. The finance minister did acknowledge Thailand’s worsening economic outlook, however, and discussed the need to re-attract investment. In his closing remarks before the vote, Pichai said he hopes that the budget will spur private investment to increase and that this will lead GDP growth to return to around 4.0-4.5%.

Deputy Finance Minister Julapun Amornvivat, on the other hand, took issue with Nattaphong’s characterization of Thailand as close to a failed state, arguing that this was “merely rhetoric” and that “you, I, and all those who have studied economics knows that we are nowhere near that state.”

Other Highlights from the Debate

• Despite being a coalition member, Bhumjaithai MP Chada Thaiseth went on the attack, saying that while he used to oppose the 10,000 baht digital wallet scheme, he now supports this policy. He therefore wants to see it happen: “I want to say to the prime minister: we have the money…if you cannot do it, the prime minister should quit…if you do not give out the money, we will definitely get Prime Minister Teng.” In response, People’s Party deputy leader Sirikanya Tansakul said the government’s economic stimulus plans were still unclear and that the government could proceed with the giveaways and “you would still get Prime Minister Teng.”

• People’s Party MP Pukkamon Nunarnan criticized how budget allocations have continued to be concentrated in Bangkok while a World Bank report showed that over half of provinces in Thailand are not fulfilling their growth potential. Meanwhile, the public investment that does go into the provinces only go to physical infrastructure. “You know how to build roads, buildings, bridges, water sources. You have built everything, but the only thing that you have not built is creativity,” she said.

• People’s Party MP Apisit Laistrooglai examined the government’s use of the soft power budget. (Apisit is a former director of the Creative Economy Agency of Thailand). In the past two fiscal years, Thailand has spent large sums on soft power but been rewarded with “big events with few attendees.” The One Family Soft Power Scheme, intended to upskill over 75,000 people, have only helped a little over 800 people. This project, he said, exemplified “thinking very big and executing very haphazardly.”³

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Update on Bhumjaithai - Pheu Thai conflict

This is already a very long piece and so I hesitate to add too much more to it. However, Thaksin Shinawatra made some very newsworthy comments last week when asked by reporters to analyze the current political situation. He said that in order to ensure that Pheu Thai’s policies “truly reach the people,” the party must take control of the Ministry of the Interior. (He said that he does not think this ministry has been performing adequately). He also said that it would be ideal if Pheu Thai could control the Ministry of Agriculture and Cooperatives, Ministry of Commerce, Ministry of Finance, and Ministry of Transportation.

Of those, Pheu Thai does already control Commerce, Finance, and Transportation, but the Interior Ministry is headed by Bhumjaithai leader Anutin Charnvirakul while Agriculture is headed by Kla Tham leader Naruemon Pinyosinwat. Asking to take these core ministries back would be tantamount to a declaration of war on Pheu Thai’s coalition partners by Thaksin. Just a day before, Anutin had made some revealing remarks when asked if the government would last to the end of its term, saying that it would if he was able to remain in the government. Thaksin knows that Bhumjaithai is critical to the coalition and said that “we don’t want them to withdraw.” Yet his comments could take Bhumjaithai closer to that scenario. But in perhaps a warning shot, Anutin has now said that he would not close the door entirely to a deal with the People’s Party.

Thaksin clearly left a lot of clean-up for his daughter to do. The Prime Minister insisted that she has not discussed the Interior Ministry with her father, and that she was not the person who made these comments. If the reporters wanted to dig deeper into this, she said, they could ask Thaksin himself. But given the weight of her father’s words, Paetongtarn’s answers will have done little to quell doubts about the stability of her coalition.

1. It’s worth noting that while Thailand has been regularly running a deficit in recent years, state revenue has steadily fallen from around 17%of GDP ten years ago to 14.6% in the next budget. Given the worsening fiscal outlook, Moody’s recently downgraded Thailand’s outlook to negative.

2. “Thinking new and doing new,” one of Thaksin’s favorite slogans.

3. A play on another Pheu Thai slogan, this one used at the last election: khid yai thum pen (“think big and we can execute”).