Cabinet okays public debt management plan

Cabinet okays public debt management plan

Scheme includes borrowing B1.34tn

A grim atmosphere prevades Khao San Road as some shops have reopened while some shops remain temporarily closed due to the lack of foreign tourists. Pornprom Satrabhaya
A grim atmosphere prevades Khao San Road as some shops have reopened while some shops remain temporarily closed due to the lack of foreign tourists. Pornprom Satrabhaya

The cabinet on Tuesday greenlighted the public debt management plan which includes a new borrowing of 1.34 trillion baht for fiscal 2022, starting in October.

According to Rachada Dhnadirek, deputy government spokeswoman, the public debt management plan also includes a plan to manage existing debt worth 1.55 trillion baht, along with a plan to repay debt worth 339 billion baht in fiscal 2022.

"This public debt management plan covers the state borrowings used for various purposes including borrowing to compensate a budget deficit; additional loans under the emergency loan decree in 2021; borrowing to finance investment projects of the state and state-owned enterprises such as double-track rail system, the third phase of Suvarnabhumi airport, the improvement of the electricity grid and debt restructuring of government agencies," she said.

Ms Rachada cited the Finance Ministry's report that investments under the public debt management plan in fiscal 2022 will help boost the economy and support economic recovery after the Covid-19 situation improves.

Under the debt plan, public debt is expected to reach 62.6% of GDP in the 2022 fiscal year.

The public debt is expected to hit 58.9% of GDP by the end of September this year, according to the Finance Ministry. It stood at 55.6% at the end of July, official data showed.

In a related development, Thailand's plan to raise the ceiling of the public debt-to-GDP ratio from 60% to 70% was announced in the Royal Gazette dated Sept 22.

The State Monetary and Fiscal Policy Committee chaired by Prime Minister Prayut Chan-o-cha decided on Sept 20 to raise the ceiling of the public debt-to-GDP ratio from 60% to 70% which will allow further borrowing to rehabilitate the economy battered by Covid-19.

The decision was intended to provide the government with more fiscal space should the need arise for the government to borrow more money to carry out medium-term financial policies.

Finance Minister Arkhom Termpittayapaisith insisted last week the government should not have a problem repaying public debt, even if it borrows more in the future.

Mr Arkhom said raising the ceiling gives the government more room to borrow more than 1.2 trillion baht.

However, the government would consider additional borrowing only when necessary, he said. The move does not mean the government intends to borrow the full amount.

The minister insisted the country has strong debt repayment capability. The ratio of net public debt to the government's estimated net annual revenue is 31.8%, lower than the ceiling of 35%.

Moreover, the proportion of foreign currency-denominated public debt is as low as 1.67%.

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