Thailand: Lower public debt on the cards
Thailand’s fiscal status is improving thanks to a gradual economic recovery following the pandemic, which may prompt the government to lower the ceiling of the public debt-to-GDP ratio from the current 70%, according to the Public Debt Management Office (PDMO).
Speaking on Monday after a meeting of the State Monetary and Fiscal Policy Committee chaired by the prime minister, PDMO director-general Patricia Mongkhonvanit said Thailand’s overall public debt is at a normal level.
“The public debt status is considered under control right now. Compared with the previous forecast, the rate is much lower than the committee’s expectations thanks to the country’s economic expansion after the years-long Covid-19 restrictions,” she said.
Mrs Patricia said the committee has the authority to review the ceiling of the country’s public debt-to-GDP ratio every three years, and closely monitors it annually.
“If the economy expands, the ratio of public debt-to-GDP can be lowered. The ratio still depends on needed government budget usage and investment,” she said.
Finance Minister Arkhom Termpittayapaisith said Thailand’s economic situation is improving and there are no significant risks that may derail the recovery next year.
Regarding the possibility of the government reducing Thailand’s public debt-to-GDP ratio to the previous rate of 60% in the medium term, Mr Arkhom said such a move required thorough consideration because the Thai economy is still in the early stages of recovery.
He said the government must evaluate the overall impact from many perspectives, including the effect from the global economy.
In October this year, PDMO said it expected Thailand’s public debt-to-GDP ratio in fiscal 2023 to fall to 60.4%, from an anticipated 60.6% in fiscal 2022, attributed to the economic recovery.
GDP is expected to grow to 18.5 trillion baht next year, from an estimated 17.2 trillion in fiscal 2022.
The forecast takes into account the government’s plan to borrow 695 billion baht to offset the budget deficit in fiscal 2023.
The executive decree that took effect on Oct 5 allows the Finance Ministry to provide a guarantee for loan repayments and borrowing by the Oil Fuel Fund worth up to 150 billion baht, in a bid to prop up its liquidity and help it cope with rising domestic energy prices.
The debt-to-GDP ratio will surge to 61.2% if the fund borrows the full amount of 150 billion baht next year. However, the fund is unlikely to borrow the full amount as global oil prices are declining.