PDMO says public debt under control despite spree

PDMO says public debt under control despite spree

A train station in Khon Kaen, where part of the double-track railway project is taking shape. Patipat Janthong
A train station in Khon Kaen, where part of the double-track railway project is taking shape. Patipat Janthong

The Public Debt Management Office (PDMO) insists that the country's ratio of public debt to GDP will not exceed 50% over the next 10 years, despite the government's hefty investment plan for big-ticket infrastructure development worth 2 trillion baht over the next 4-5 years.

Public debt is expected to peak at 46-47% of GDP in 2025, a level still far below the ceiling of 60% set by the Finance Ministry's fiscal sustainability framework, said Jindarat Viriyataveekul, a deputy spokeswoman for the PDMO.

A series of factors, including economic growth, the infrastructure budget that will be taken out over several years and joint investment through public-private partnership schemes, will prevent a sharp increase in public debt, she said.

Thailand's public debt amounted to 6.49 trillion baht at the end of April, up from 6.45 trillion at the end of March. But the ratio of public debt to GDP fell slightly to 41% at the end of April from 41.2% a month earlier, according to PDMO data.

Ms Jindarat said the upward interest rate trend will not take a toll on the public debt burden, as the interest rate for 90% of the debt is fixed.

The PDMO plans to start reviewing the average maturity of government bonds next year to prepare for the upward interest rate cycle, she said.

After several Southeast Asian central banks started raising policy rates in sync with the US Federal Reserve and higher-than-expected Thai economic growth in the first quarter, a growing number of economists believe that the Bank of Thailand's Monetary Policy Committee will start normalising monetary policy later this year.

The cabinet recently approved a public debt management framework for 2019-21 under the Fiscal Responsibility Act. In the framework, the ratio of public debt to GDP is still limited to 60%, the government's debt liabilities are capped at 35% of estimated revenue for that fiscal year, and the government must allocate 2.5-3.5% of annual budget for debt principal payment.

The PDMO and the Asian Development Bank will hold the 2018 Asian Regional Public Debt Management Forum in Koh Samui next week.

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