Public debt management strategies will be aimed at maintaining debt under 50% of gross domestic product to help create a cushion for policy makers in case of future crises, says Chularat Sutheethorn, director-general of the Public Debt Management Office (PDMO).
The Finance Ministry's medium-term debt management framework calls for public debt to be maintained under 60% of GDP, which for next year is projected at 12.5 trillion baht.
But Ms Chularat said in practice, the PDMO plans to keep public debt under 50% of GDP, with debt service obligations accounting for no more than 15% of budget expenditures in any given year.
"Even though the ministry framework sets the debt limit at 60% of GDP, we're going to play it safe and maintain debt below 50% of GDP," she said.
If public debt nears the 50% target, the PDMO will look to see which government projects can be delayed to help ease the need for new borrowing.
"Without a 50% target and if we allowed public debt to near the 60% level, it would complicate our task of debt management. And in an emergency, if there is the need to increase borrowings, we could face problems if the public debt level is already near the 60% limit," said Ms Chularat.
In any case, she said public debt of 60% of GDP, relative to many other countries, should not be considered high.
Building a cushion equivalent to 10% of GDP would help give policymakers greater flexibility to cope with unforeseen volatility in global markets or emergency spending needs.
"Guarding against the unexpected is the scariest task in terms of managing the public debt," said Ms Chularat.
The government is finalising plans to authorise new spending plans of 2 trillion baht over the next seven years for public infrastructure including new rail, road and mass transit programmes.
Earlier this year, the government approved new public debt of 350 billion baht for spending on water management and flood prevention programmes.
Ms Chularat said even with borrowing to fund the new infrastructure and flood prevention programmes, public debt is still expected to remain under the 50% of GDP threshold over the next five years, assuming economic growth averages 4.5% to 5% per year over the period.
Finance Minister Kittiratt Na-Ranong has set a target for cutting the deficit by 20% per year over the next few years, with a return to a balanced budget by 2017.
For fiscal 2013, the government projects a budget deficit of 300 billion baht with expenditures of 2.4 trillion.
Public debt this fiscal year is estimated at 47.5% of GDP, with debt service obligations over the year amounting to 7.4% of total budget expenditures.
Public debt at the end of fiscal 2012 ending this past Sept 30 was 4.94 trillion baht or 43.9% of GDP.