Debt ceiling could be raised to 70% soon

Debt ceiling could be raised to 70% soon

Finance Ministry can propose move today

A deserted alley in Chatuchak weekend market, where several shops remain closed due to the latest outbreak of Covid-19. (Photo: Apichart Jinakul)
A deserted alley in Chatuchak weekend market, where several shops remain closed due to the latest outbreak of Covid-19. (Photo: Apichart Jinakul)

The Finance Ministry may propose on Monday raising the ceiling of the public debt-to-GDP ratio to 70% from 60%, says a ministry source who requested anonymity. The proposal is to a committee overseeing fiscal discipline.

Raising the ceiling to 70% would allow Thailand to borrow an additional 2 trillion baht, the source said.

The committee, chaired by the prime minister, has the authority to revise the ceiling every three years, including this year.

The committee is made up of representatives from the Finance Ministry, Bank of Thailand, the National Economic and Social Development Council and the Budget Bureau.

The government issued the first emergency loan decree last year to authorise it to borrow a total of 1 trillion baht to fund its stimulus schemes to combat the Covid-19 pandemic.

A second decree was issued this year to allow the government to borrow an additional 500 billion baht.

In September 2019, Thailand's public debt stood at 6.90 trillion baht, or 41.0% of GDP. The figure rose to 8.91 trillion baht, or 55.6% of GDP, as of July this year, which was mainly attributed to the first loan decree. The figure is expected to soar to 58.8% by the end of fiscal 2021 at the end of this month.

Many economists and some private organisations have called for the government to borrow more to improve the flagging economy, which has been battered by the prolonged pandemic.

The source said the ratio is likely to soar past the 60% ceiling if the government borrows more and the Thai economy expands at a lower rate this year or even contracts.

The 60% ceiling has been used for a long time. At one point, the Finance Ministry mulled lowering the ceiling to 55%.

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