Agency undaunted by public debt level

The government’s level of public debt is not yet a concern compared with countries that have a similar credit rating to Thailand, according to the Public Debt Management Office (PDMO).
Jindarat Viriyataveekul, public debt advisor for PDMO, said the government’s public debt level remains within acceptable limits, not exceeding the threshold of 70% of GDP.
“The level is still within this limit, even though the government borrowed an additional 145 billion baht for fiscal 2024 to fund the 10,000-baht handout programme for vulnerable groups,” said Mrs Jindarat.
She said although public debt rose after the 2020-21 period during the pandemic, when the government issued loan decrees totalling 1.5 trillion baht, Thailand’s public debt level is still much lower than some developed nations.
Compared with countries that have the same credit rating as Thailand (BBB+), Thailand’s public debt level is about average among this group, said Mrs Jindarat.
As of August, the government’s public debt tallied 64.0% of GDP.
If the International Monetary Fund’s (IMF) standard for counting public debt is applied, which considers only government debt plus local administrative organisations’ debt, Thailand’s tally would be 54-55% of GDP. The IMF method excludes state enterprise debt in the total, but PDMO includes it in the public debt total.
According to Mrs Jindarat, for fiscal 2025 Thailand’s public debt level is projected at 66-67% of GDP, including debt obligations arising from the government’s cash handout.
However, the public debt level may be lower than this forecast if GDP growth exceeds expectations next year, she said.
Public debt is one factor rating agencies consider when assessing a country’s credit rating.
While rating agencies generally prefer not to see prolonged fiscal deficits, they do not specify when a country should achieve a balanced budget, as this depends on each country’s context.
The agencies merely want to see balanced budgets in the future, said Mrs Jindarat.
Fitch Ratings, one of three agencies employed by the Finance Ministry to evaluate government bond credit, is scheduled to meet with the Finance Ministry, the Bank of Thailand and the National Economic and Social Development Council on Nov 1 to assess the country’s economic situation.
She said rating agencies, including Moody’s and Standard & Poor’s, generally consider several factors in evaluating a government’s credit rating: economic strength, institutional strength, fiscal strength and the economy’s resilience to event risk.
According to Mrs Jindarat, to manage public debt, the Finance Ministry has a plan to reform the tax system and improve tax collection efficiency, while a reduction in government expenditure will depend on government policy.
In terms of a debt repayment plan, PDMO intends to request an increased budget for principal repayment to reduce the government’s interest burden, she said.
For fiscal 2025, the government set a total expenditure budget of 3.75 trillion baht, which leaves a deficit budget, requiring borrowing of 865 billion baht to cover the deficit. The budget allocated for principal repayments is set at 150 billion baht, accounting for around 4% of the total expenditure.