Finance Minister Apisak Tantivorawong has delegated the Public Debt Management Office (PDMO) to explore overseas borrowing sources in preparation for an impending local rate hike.
"We have been assigned by the finance minister to study the costs of borrowing from abroad, particularly to fund long-term programmes," said Theeraj Athanavanich, a bond market adviser to the PDMO. "We've studied all sources, including the Asian Development Bank, World Bank and Japan International Cooperation Agency. We still plan to borrow from the domestic market next year, as the cost is likely to stay relatively low at around 3%."
The likelihood of an interest rate hike in the domestic market is a risk factor the PDMO must heed for local market liquidity, Mr Theeraj said.
Now is not the right time for the Bank of Thailand to start normalising the rate, he said, citing fragility in some areas of the country's economy.
The central bank has maintained the policy rate at 1.5% since April 2015, but the growing split among rate-setters at last month's meeting reinforced the belief that a rise in the policy rate for the first time since August 2011 is on the horizon.
The meeting's minutes highlighted concerns over financial stability resulting from rampant search-for-yield behaviour as the extended low-interest environment leads to underpricing of risks, as well as the need to build policy space.
The central bank's benchmark rate is 50-75 basis points below that of the US benchmark, and the spread is expected to widen as the US Federal Reserve hints at one more rate hike in December to a range of 2.25-2.50%.
Most economists forecast the Bank of Thailand to stand pat at 1.5% throughout this year.
Mr Theeraj said Thailand's foreign-denominated debt is minimal and ¥50-60 billion (14.6-17.5 billion baht) in debt will be refinanced to baht denomination this year.
With the small amount of foreign-denominated debt, Thailand has enormous room to borrow from overseas, he said, adding that the foreign currency borrowing plan is aimed at preventing state borrowing from stealing from local funding sources allocated to the private sector.
Capital movement is a challenge for the PDMO to manage public debt, but offshore funds are still flowing into Thailand amid a sell-off in emerging markets, Mr Theeraj said.
Since 2014, the government has run up public debt to finance big-ticket infrastructure investment, and even so, the country's ratio of public debt to GDP has fallen as the economy has grown, he said.