The Finance Ministry insists public debt will not exceed its self-imposed limit of 50% and the international standard of 60% of GDP, says deputy director-general of the Fiscal Policy Office (FPO) Ekniti Nitithanprapas.
Prepared for a rainy day: Officials have assured the IMF that Thailand’s publicdebt- to-GDP ratio will not exceed50% despite an uptick in recent years. SEKSAN ROJJANAMETAKUN
His comment came after the International Monetary Fund (IMF) stated in its annual economic review for Thailand that the country's public debt started to rise in fiscal 2012 and its public debt-to-GDP ratio will be 53% by 2018.
"We already informed the IMF we will keep a sustainable framework for fiscal discipline," he said.
The IMF's information in the annual report is not up-to-date, as the review was conducted in June and July and the report was released this month, said Mr Ekniti.
For example, the IMF estimated Thailand will run a budget deficit of over 3% for the last fiscal year ended Sept 30, but it was only 2.1% of the country's GDP, he said.
Ekniti: Report used outdated information
Mr Ekniti said the country's third-quarter GDP growth will expand beyond the second quarter's 2.8% year-on-year, as most economic indicators improved despite the fragile state of exports.
Abhisit Vejjajiva, the opposition leader, said the IMF's report will not erode foreign investor confidence, as the budget will not exceed the 50% debt ratio tomorrow.
He said the IMF merely warned that balancing the budget and keeping the debt-to-GDP ratio below 50% the next five years are unlikely to happen. The IMF suggested the government must either raise revenue or cut spending, recommending it lower spending for unnecessary projects such as the rice-pledging scheme.
Bank of Thailand governor Prasarn Trairatvorakul said the central bank's accommodative monetary policy is appropriate, given moderate economic growth with inflation pressure in check.
The IMF also recommended Thai authorities stand ready to normalise monetary policy if inflationary pressures re-emerge. It observed that capital flow volatility presented challenges to macroeconomic management. The central bank lowered its policy interest rate by 25 basis points, to 2.5% from 2.75%, in May to boost economic growth, although the rate has held steady since.
Mr Prasarn said capital outflow is not a concern since an adjustment has taken place in bond, foreign exchange and stock markets, indicating no panic or need for intervention. Foreign investors have not voiced deep concern.