The cabinet's recent endorsement to approve an additional loan of 214 billion baht to compensate for the budget deficit is intended as a credit line in case public expenses exceed revenue, says the Public Debt Management Office (PDMO).
The amount of borrowing would have to be considered with the level of treasury reserves, expenditures and revenues, said Patricia Mongkhonvanit, the PDMO's director-general.
The level of borrowing would be assessed by the government in case revenue collection falls below the target by 9% or about 300 billion baht, Mrs Patricia said.
"This is not the first time the government had to borrow money in the event expenses exceeded revenue," she said. "We did this during the Asian financial crisis."
If the government borrows the full loan amount, this will increase the ratio of public debt to GDP to 52.4% in 2020 from the existing 45.8%, according to the PDMO.
For fiscal 2021, the ratio of public debt to GDP is expected to rise to 57.8%, depending on Thailand's GDP growth.
The PDMO has taken out a sum of 338 billion baht under the 1-trillion-baht emergency loan decree.
The government will issue a further 50 billion baht in savings bonds for sale to the public from next week to help finance the budget deficit, Mrs Patricia said.
The bonds will be offered in two tranches: 5 billion baht in four-year bonds with a coupon of 1.7% and 45 billion of seven-year bonds with a 2.22% coupon.
The proceeds will be for financing the budget deficit, rather than for the outbreak response, Mrs Patricia said.
The first tranche of savings bonds will be sold via the Pao Tang app, whereby investors can make purchases via PromptPay transfer from every financial institution, with the investment sum capped at 5 million baht per person. Sales will start on Aug 25 and run until Sept 11.
For the second tranche, sales will be distributed among four commercial banks divided into two periods. The first period runs from Aug 26 to Sept 3 and the second period from Sept 4 to 11.
The investment sum is capped at 10 million baht per person without limiting the purchase per bank for the first period. No advanced purchase limit is applied to the second period.
The offering follows the sale of 50 billion baht in government savings bonds in May to help mitigate fallout from the coronavirus outbreak under a 1-trillion-baht borrowing plan.