Public Debt Management Office gets savings bonds in order to fund stimulus

Public Debt Management Office gets savings bonds in order to fund stimulus

The Public Debt Management Office (PDMO) is preparing to issue 50-billion-baht savings bonds early next year to fund the government's fiscal stimulus incentives.

The plan to issue government savings bonds under the fiscal 2021 budget is capped at no more than 100 billion baht, said Patricia Mongkhonvanit, the PDMO's director-general.

The 50-billion-baht savings bonds are the first batch of issuance, said Mrs Patricia.

The issuance of government savings bonds, however, will have to be assessed in accordance with the government's financial needs, she said.

If there is no explicit need for funding, the PDMO will not issue government savings bonds, said Mrs Patricia.

Government savings bonds are a good option for funding as the public has responded well in the past, she said.

Regarding the issuance of government bonds after New Year to compensate for the fiscal deficit or alleviate the plight of the pandemic, further assessments will be made as to whether issuing public bonds could help address both problems, said Mrs Patricia.

The interest rate for the government savings bonds will be assessed based on the benchmark policy interest rate of the Bank of Thailand's Monetary Policy Committee, she said.

The interest rate for government savings bonds is referenced with the policy interest rate, with market conditions as another variable determining the interest rate placed on government savings bonds, said Mrs Patricia.

For further borrowings made by the government in case expenses exceed revenue, the law of the Finance Ministry stipulates the ministry can seek loans to compensate for a 20% deficit in budget expenditure plus 80% of the loan principal.

In total, the maximum loan amount should not exceed 700 billion baht, said Mrs Patricia.

The law related to the fiscal 2021 budget stipulates the maximum loan to compensate for the fiscal deficit should not exceed 600 billion baht.

There is still room for 100 billion baht in borrowing for the government to take out, she said.

If the government wants to use loans that exceed the legal limit, a special law would need to be enacted, which is subject to consultations with the Finance Ministry's policy department, said Mrs Patricia.

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