Currency and Interest Rate Outlook

K KASIKORNTHAI Sources and Uses of Public Funds FY2021 Budget ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK FY2021 budget act was approved in September 2020 and was published in the Royal Gazette on October 7, 2020. Budget Planning Tax Revenue + Non-Tax Revenue (Bt2.68trn) + Borrowing under FY2021 Budget Act (Bt609bn) FY2021 Budget (Bt3.29trn) = General Budget (Bt2.54trn or 77%) + Investment Budget (Bt0.65trn or 20%) + Principal Repayments (Bt0.10trn or 3%) Budget Execution Budget Disbursement (100% target disbursement rate + carry-over) General Administration (Bt1.40trn or 42%) ■ Defense ■Homeland security Economic Affairs (Bt521bn or 16%) Development of the country's competiveness ■ Subsidize SOES (e.g. Infrastructure project, free bus and train service policy) ■Infrastructure/Agricultural Development Social and Community Services (Bt1.37rn or 42%) ■ Education ■ Universal Healthcare Extra-Budget Borrowing under Extra-Budget Borrowing Special Act/Decree To relieve the impact of the COVID-19 outbreak, the government approved emergency decree that allows the Finance Ministry to borrow up to Bt1.0trn Notes: Thai government's fiscal year (FY) begins on 1 October and ends on 30 September of the following year. IFF = Infrastructure Fund, PPP = Public-Private Partnership, SFIs = Specialized Financial Institutions Quasi-Fiscal Instrument SFIs taking deposits, borrowing, as well as government subsidy Quasi-fiscal activities (e.g Soft Loan Program) บริการทุกระดับประทับใจ 125 K KASIKORNTHAI Government Fiscal Budget Billion Baht 400 600 1200 1000 800 600 100 163 400 609 200 450 450 469 390 FY2017 FY2018 Budget Deficit Economic Policies ■2020 Budget Act ■2021 Budget Act FY2019 FY2020 Extra-Budget Borrowing Key Points ■FY2020 budget at Bt3.2trn with a deficit of Bt469bn ■FY2021 budget at Bt3.29trn with a deficit of Bt609bn FY2021 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Thai parliament approved FY2021 budget worth Bt3.29trn, with a deficit of Bt609bn ■Implementation of FY2021 budget effective October 2020 ■To relieve the impact of the COVID-19 outbreak, the government approved an emergency decree allowing the Finance Ministry to borrow up to Bt1trn (Bt600bn for FY2020 and Bt400bn for FY2021), of which Bt600bn will be used for relief measures and public health and Bt400bn will be spent on economic recovery measures ■In addition to growth in commercial bank loans, government funding activities may affect system liquidity Implementation Process FY2020 ■ Effective date: February 24, 2020 FY2021 ■ Effective date: October 7, 2020 Possible Impacts/ Expected Budget ■Government spending will help maintain economic momentum ■Fiscal sustainability to remain manageable in near-term; however, continued debt creation, both from budget deficit and other borrowings, may impact long-term fiscal sustainability Note: Thai government's fiscal year (FY) begins on October 1 and ends on September 30 of following year - NLA = National Legislative Assembly; PPP = Public-Private Partnership Sources: The Ministry of Finance and KResearch (as of October 2020) บริการทุกระดับประทับใจ 126

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