Japan-based Rating and Investment Information Inc (R&I) has raised Thailand's foreign currency issuer rating to A- from BBB+, with a stable outlook, suggesting the likelihood of rating upgrades by other international credit rating agencies.
A higher credit rating will lower Thailand's borrowing costs, said Patricia Mongkhonvanit, director-general of the Public Debt Management Office.
Thailand's credit rating has continued to climb after Moody's Investors Service changed Thailand's rating outlook to positive from stable in July, while Standard and Poor's plans to gather information on Thailand in December for an update, she said.
Mrs Patricia said the rationale behind R&I's upgrade includes the government prioritising development of value-added industries, the Eastern Economic Corridor and megaprojects to sustain economic growth potential over the long term, as well as a continuous current account surplus and high international reserves relative to foreign-denominated currency debt.
Other factors include the enforcement of the Fiscal Responsibility Act and greater political stability after the elected government was installed.
"R&I believes that fiscal management will remain sound, with the Fiscal Responsibility Act in place," the credit rating agency said in a release. "The country's current account balance has been consistently in surplus, and overall, concern over the external position is limited.
"On the political front, the country returned to civilian rule after a general election and is heading towards normalisation, which R&I views positively. R&I has upgraded the foreign currency issuer rating to A- and affirmed the domestic currency issuer rating at A-."
R&I expects Thai economic growth to be muted this year and next.
Thailand's current account surplus is forecast to narrow moderately because of domestic investment driven by large infrastructure projects.
Supported by ample foreign reserves relative to external debt, foreign currency liquidity is of little concern, R&I said.
To strengthen the fiscal discipline framework, in April 2018 the government introduced the Fiscal Responsibility Act, which constitutes a comprehensive fiscal management policy.
"While a prudent fiscal management stance was already in place, as exemplified by the voluntary establishment of a debt ceiling, the government decided to reinforce the framework through legislation," R&I said. "With outstanding debt staying relatively low as a percentage of GDP, there is no particular concern about funding. Fiscal risk is contained."