(Bloomberg) -- A coalition of Thai pro-democracy parties said a faster certification of the results of the May 14 vote can pave the way for an early government formation as it’s key to a non-disruptive budget transition to stimulate Southeast Asia’s second-largest economy.
A meeting of the leaders of the eight-party alliance led by its prime ministerial candidate Pita Limjaroenrat agreed on Wednesday to form a panel to oversee a transition of the federal budget to the fiscal year starting Oct. 1. The committee will supervise any changes to the budget proposals already approved by the cabinet led by incumbent premier Prayuth Chan-Ocha, Pita said at a briefing.
Though the Election Commission has up to 60 days from the date of voting to certify the results, the agency has said it will accelerate the process and validate at least 95% of the seats before the deadline. That may help the bloc to form the government at least two to three weeks earlier, Pita said.
The uncertainty over government formation and potential delay to budget approval have spooked investors, with foreign investors withdrawing a net $3 billion from Thai stocks so far this year and the baht losing almost 3% since the vote to become the worst-performing currency in Asia during the period.
The political outlook will remain unclear until a government is formed in early August, and as Move Forward’s bid to take power “seems to be facing difficulties,” strong support is needed from senators and the second-place Pheu Thai Party, said Tim Leelahaphan, a Bangkok-based economist at Standard Chartered Bank Plc.
The post-election stalemate will continue to weigh on Thai financial markets over the next three months, with an investor sentiment index slipping into the “bearish zone” for the first time in eight months, according to the Federation of Thai Capital Market Organizations.
“Domestically, eyes are on the new government formation,” the federation said. “The slower it is formed, the higher concern it will be as it will impact the approval of budget bill for 2024 fiscal year timeline.”
In addition, investors require clarity on economic policies that the winning party has announced, the group said. Policies keenly watched by the market include stimulus package on consumption, minimum wage implementation and energy related measures such as electricity tariff reduction and any changes in taxes, it said.
While the Move Forward Party-led coalition has the support of about 62% of the lawmakers in the 500-member House of Representatives, it’s still short of the threshold of 376 votes needed to ensure Pita’s win in a joint sitting with the 250-member Senate. Pita also faces allegations of violating elections rules by owning shares in a defunct media firm, which some analysts say can derail his bid to become the prime minister.
The pro-democracy coalition is in talks with members of the powerful Senate, stacked with allies of the pro-military royalist establishment, to drum up support for Pita. A majority of the Senate opposes Pita as his party has pledged to to amend the lese majeste law, which punishes criticism against the country’s king by up to 15 years in prison.
With the coalition enjoying the backing of the majority of voters, all hurdles must be removed from its path to forming the government, said Wan Muhamad Noor Matha, leader of the Prachachat Party.
“Let’s stop being afraid of dictators. Time’s up for listening to them or their appointees,” Wan said. “It’s time for the people who want to have a people’s government.”
©2023 Bloomberg L.P.
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