BANGKOK, March 19 Thailand's cabinet on Tuesday approved a bill to borrow 2 trillion baht ($67.7 billion) to fund long-term infrastructure projects including high-speed railways, highways and mass-transit networks, with spending to be completed by 2020.
"The funds will make transport in the country better and the use of energy will be more efficient," said Finance Minister Kittirat Na Ranong.
Kittirat told reporters that loans would be sought domestically and funding would not come from the central government budget.
But Prime Minister Yingluck Shinawatra told reporters that some of the funding might have to be from overseas.
Kittirat said that despite the huge spending plans, public debt would not exceed 50 percent of gross domestic product. It stands at around 44 percent now. Repayments would be spread over 50 years.
The seven-year infrastructure spending plan will need to pass three parliamentary readings before gaining final approval but it should pass easily, given the ruling party's overwhelming majority.
The opposition Democrat Party has voiced opposition to the bill and is urging the government to finance its infrastructure plans through its annual budget to ensure transparency, but Yingluck defended the project.
"We have ways to ensure transparency by being methodical about our purchases and stringent about how and where we spend the funds," she told reporters on Tuesday, adding infrastructure investment would boost investor confidence.
On March 8, Thailand's credit rating was raised to BBB+ by Fitch Ratings, which along with others had cut Thailand's grade during high political tensions some years ago. In announcing its upgrade, Fitch said that Yingluck's government "has consolidated its position and has faced no serious extra-legal challenges since its election in July 2011."
Yingluck told reporters last week that Thailand's strong fiscal position would allow the state to finance infrastructure projects through government borrowing and private sector participation.
"The shift from road to rail will significantly reduce time and the cost of transportation of products to our neighbours in Asia," she said in a speech to the Foreign Correspondents Club of Thailand.
($1 = 29.5500 Thai baht) (Additional reporting by Pracha Hariraksapitak and Aukkarapon Niyomyat; Editing by Alan Raybould and Richard Borsuk)