Public debt seen hitting 57% of GDP

Public debt seen hitting 57% of GDP

Key finance official says budget deficit is expected to average 2.8-2.9% into 2025

The ratio of public debt to GDP in the next five years should not exceed the 60% ceiling even if taking into account the 1-trillion-baht loan decree, though the estimate excludes the probability of additional loans, says a senior finance official.

The Public Debt Management Office (PDMO) has told Finance Ministry authorities that public debt as a share of GDP will not rise beyond 57% over the next five years, with the government continuing to incur a budget deficit at an average of 2.8-2.9% of GDP, said Krisada Chinavicharana, the finance permanent secretary.

The projection includes the 1-trillion-baht loan decree but excludes the possibility of additional loans, Mr Krisada said.

Revenue collection for fiscal 2021, which started on Oct 1, is expected to meet the 2.67-trillion-baht target based on GDP growth of 4-5%, he said.

The ratio of public debt to GDP stands at 48%, worth 7.7 trillion baht, according to PDMO data.

PDMO director-general Patricia Mongkhonvanit said earlier that the ratio would exceed the 60% ceiling, depending on whether the government engaged in additional borrowing such as issuing loan decrees.

Approved in April, the 1-trillion-baht loan decree was aimed at shoring up the economy during the coronavirus crisis.

Of the amount, 600 billion baht is for implementing health-related plans and giving financial aid to affected individuals. The remaining 400 billion baht is for economic and social rehabilitation through projects aimed at creating jobs, strengthening communities and building community infrastructure.

The public debt level would rise to 57% of GDP upon borrowing the full amount under the loan decree.

The number of unemployed people is expected to rise to 2.5 million this quarter, accounting for a cumulative unemployment rate of 6.5%, said Rak Vorrakitpokatorn, president of Thai Credit Guarantee Corporation (TCG). He cited data from the National Economic and Social Development Council.

Of the 2.5 million, 500,000 are identified as new graduates and the rest are unemployed. The total registered workforce numbers 38.4 million people.

The projection is a surge from 2.6 million unemployed individuals in the second quarter.

The TCG has joined the Labour Ministry's Department of Skill Development to provide 29.3 billion baht in credit guarantees for 95,000 people to continue working while developing their skills, Mr Rak said.

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