Deputy Prime Minister and Minister of Finance Ekniti Nitithanprapas disclosed that regarding proposals to allocate remaining loan funds from Middle East crisis relief measures to manage fuel prices via excise tax cuts, the government currently possesses multiple energy price management tools and must select appropriate measures based on prevailing circumstances.
Specifically, the government relies on three primary management mechanisms: 1. utilizing the Fuel Oil Fund mechanism, 2. requesting cooperation from oil refineries to contribute excess refining margins toward retail price relief, and 3. reducing fuel excise taxes.
The government has not yet opted for tax cuts as each reduction immediately reduces state revenue without lowering expenditure obligations, which could ultimately force borrowing to offset lost revenue; therefore, fiscal impacts must be evaluated concurrently.
Should circumstances necessitate tax measures, the government will consider more targeted assistance, potentially focusing on specific fuel types such as E20 and B20, which contain high blending proportions of ethanol and biodiesel. This approach ensures benefits extend beyond lower fuel prices to directly support Thai agricultural producers, as ethanol relies on sugarcane and cassava as key raw materials, while biodiesel is linked to palm oil supplies.
Ekniti said discussions with the Ministry of Energy were under way. As the Fuel Oil Fund mechanism nears or reaches its limit, refinery contributions would supplement the response. Any subsequent use of excise changes would still need to be consistent with fiscal stability.
Measures to assist citizens and ease living costs must proceed alongside maintaining fiscal discipline, particularly toward the end of the current fiscal year ending in September 2026, as remaining fiscal space is constrained at approximately over THB 10 billion. Consequently, if the government rushes to enact revenue-reducing measures without comprehensively evaluating the financial burden, energy issues could escalate into broader fiscal distress, triggering a “crisis upon crisis” scenario.
Furthermore, in fiscal year 2027, the government will reassess fiscal space before deciding on additional measures. Significantly, global credit rating agency Fitch Ratings evaluated Thailand as managing energy challenges effectively while consistently maintaining robust fiscal discipline—a standard the government is determined to preserve.
