Air Force commander ACM Treetod Sonjance said the Defence Ministry, the Royal Thai Armed Forces Headquarters, the Royal Thai Army, the Royal Thai Navy and the Royal Thai Air Force are expected to prepare their budgets by mid-January.
He said Gen Prayut, who is also head of the National Council for Peace and Order (NCPO), wants to see how the armed forces and other military units prioritise their spending.
The Royal Thai Air Force has no plan to procure new fighter jets in the next budget year, ACM Treetod said. It will focus on upgrades and maintenance instead.
Preliminary plans call for upgrades to the air force's fleet of F-5 jets at the Nakhon Sawan-based Wing 4 division. The aircraft have been in service for over 30 years.
A Defence Ministry source said the proposed defence spending is likely to be a little higher than the amount approved in 2015. It is estimated to be around 193 billion to 200 billion baht.
According to the source, the National Legislative Assembly (NLA) approved a defence budget of 192 billion baht, about 550 million baht lower than the proposed 193.49 billion baht.
Of this amount, the Office of the Defence Permanent Secretary received 7.771 billion baht, the Royal Thai Armed Forces Headquarters 14.77 billion baht, the Royal Thai Army 95.48 billion baht, the Royal Thai Navy 37.52 billion baht, and the Royal Thai Air Force 35.7 billion baht.
Defence spending for the 2014 fiscal year was estimated at 184 billion baht.
According to the source, the navy is likely to propose the procurement of two to three submarines.
The navy has been vetting submarines from various countries including South Korea, China, Russia and France. South Korea's U-209 model is said to be the least expensive at 11 billion baht apiece.
Defence Minister Prawit Wongsuwon has backed the submarine purchase in principle, saying he was ready to support the navy's plan to develop its capacity if there was enough money to go around.
The source said the army is likely to propose the procurement of helicopters for general use under a budget of 2.8 billion baht. About 30 UH-1H (Huey) helicopters will be decommissioned. The US-made UH-72 (Lakota) aircraft is said to be on the army's wish list.
The army also has a plan to purchase a transporter aircraft under a budget of 1.25 billion baht. Ukraine's Antonov-30 and Spain's CN-295 are said to be at the top of the list.
Meanwhile, ACM Treetod said an air force committee is working on choosing a new fleet of training aircraft to replace the L-39 model.
The air force has allocated 3.7 billion baht in the 2015 budget to procure a new fleet of training aircraft to replace the L-39 aircraft manufactured by the Czech Republic.
There are three contenders that meet the initial specifications: T-50 aircraft from South Korea, M-346 from Italy; and the Textron Airland Scorpion from the US. The South Korean aircraft is expected to come at the top of the list.
Textron AirLand Scorpion ISR/Strike/Trainer one of candidate to replace L-39 aircraft.