Energy Minister Pichai Naripthaphan said the fund could be used for both immediate reconstruction needs and medium- and long-term flood prevention.

He declined to elaborate but said an outline for the scheme will soon be presented to Prime Minister Yingluck Shinawatra for her consideration.

Cabinet ministers last month announced a 130-billion-baht programme to assist flood victims and are considering spending hundreds of billions of baht more on new infrastructure to prevent a repeat of this year's devastating floods.

Mr Pichai suggests the Bank of Thailand Act be amended to allow the central bank to purchase government bonds to finance "New Thailand".

Alternatively, the government could issue a royal decree to facilitate borrowing from local money markets.

Mr Pichai said infrastructure development should be aimed at not only preventing floods in urban areas and key industrial zones, but also improving irrigation and water management for farming.

Cabinet ministers in any case will meet today to approve a short-term reconstruction budget focused on assisting flood victims and repairing damaged roads and other infrastructure.

Of the 130 billion baht proposed, 80 billion will come from budget cuts to existing programmes under the fiscal 2012 budget and the rest from new spending.

The cabinet has already approved increasing this year's fiscal deficit to 400 billion baht from 350 billion earlier.

Next week, ministers will consider a new three-year debt suspension for 920,000 small farmers.

The waiver, expected to cost 20 billion baht and be run through state-owned banks, will cover farmer debts of up to 50,000 baht each.

The Finance Ministry said 630,000 farmers owing a combined 77 billion baht to the Bank for Agriculture and Agricultural Cooperatives (BAAC) would benefit, as would farmers owing another 12 billion to other state banks.

Deputy Finance Minister Boonsong Teriyapirom said the BAAC will also expand the debt-suspension scheme to other low-income earners.