Last year, real GDP in Thailand is estimated to have decline by more than 8%.
It is important for a return of confidence that the economy should begin to recover in 1999.
Many factors make recovery difficult, such as the NPL problem, large excess capacities in the
economy and sluggish export performance. Because of this the government decided to put
together a major fiscal stimulus package, which was announced on 30 March 1999. The
package included a reduction in value added tax (from 10% back to the pre-crisis level of
7%), a reduction in personal income tax for the lowest bracket, a reduction in excise tax on
bunker oil and price reduction for electricity and LPG, and a Baht 53 billion increase in
government expenditure financed by external borrowing (partly through the Miyazawa fund).
The fiscal stimulus package is expected to lead to an increase in fiscal deficit of about Baht
134 billion over the next two years.