Arkhom urges external loan sources
published : 24 Nov 2020 at 20:00
writer: Wichit Chantanusornsiri
The Public Debt Management Office (PDMO) has been asked to consider seeking external loans to diversify lending sources amid higher demand from the private sector amid the Covid-19 crisis, says the Finance Ministry.
External loans should be obtained from international financial institutions as opposed to loans borrowed from overseas money markets, said Finance Minister Arkhom Termpittayapaisith.
The existing borrowing costs of loans from the two sources are roughly the same, said Mr Arkhom.
Of the total public debt worth 7.8 trillion baht or 49.3% of GDP, external debt is valued at 86.8 billion baht. Of the amount, 28.7 billion baht is classified as an external debt for government project financing and 58.1 billion is on-lending, under which the government borrows money and lend it to someone else.
Obtaining external loans is a normal practice, he said, citing how China still seeks external loans to develop its technological capacity.
For Thailand, borrowing from external sources should focus on four main pillars, said Mr Arkhom.
External loans should be used for projects involving high-technology transfer, mass transit systems, green economy and social investment such as health care and health tourism, he said.
The World Bank, International Monetary Fund, Asian Development Bank and international credit rating agencies have all agreed that Thailand still needs more investment, said Mr Arkhom.
He said the public debt-to-GDP ratio at 49.35% remains well below the public debt ceiling of 60% of GDP.
Although the government has issued the 1-trillion-baht loan decree to mitigate adverse effects from the Covid-19 pandemic crisis, the public debt-to-GDP ratio is still within the limit, said Mr Arkhom.
Growth prospects also hinge on how foreign visitors are allowed to enter the kingdom since the tourism industry accounts for 12% of GDP, said Mr Arkhom.