The process of forming a new coalition government in Thailand gains momentum as Prime Minister Srettha Thavisin finalizes his cabinet lineup. There is a strong likelihood that the former property tycoon will retain control of the finance ministry, aiming to bolster growth through fiscal stimulus.
Srettha announced that the list of ministers and their portfolios is expected to be submitted for vetting to the cabinet secretariat on Monday. Once the list is cleared, it will be submitted for royal endorsement, a process that typically takes two to three days.
Reports suggest that nominees from the Pheu Thai party, which leads the 11-party coalition, are likely to retain key ministries such as commerce and transport, in addition to finance. The United Thai Nation, linked to the military, is expected to be given the energy and industry portfolios, while the Bhumjaithai party, the second-largest group in the coalition, is likely to occupy the ministries of interior, education, and labor.
Srettha's election as the leader of the coalition brings an end to months of political impasse that resulted in a partial policy paralysis and the exit of foreign investors from Thailand's stocks and bonds. However, as the new prime minister, his first challenge will be finalizing the state budget for the upcoming fiscal year amid a slowdown in China, Thailand's leading trading partner, a potential drought, and high levels of household debt.
The new government plans to announce its policy priorities before mid-September in parliament once the cabinet is sworn in. Srettha emphasized that the focus will be on promoting tourism as a short-term economic stimulus, with plans to enhance the industry before the implementation of the digital cash scheme in early 2022.
In an effort to stimulate the economy, Srettha's Pheu Thai party has pledged to distribute a one-time handout of 10,000-baht ($283) to approximately 55 million Thais above the age of 16. This cash distribution aims to encourage spending on goods and services within local neighborhoods.
While the election of a prime minister and royal endorsement have removed one source of political uncertainty, the new government will face challenges in maintaining a balance among the diverse forces within the coalition. This delicate balance may come at the cost of effective policymaking, according to Fitch Ratings.