Thailand’s Fiscal Outlook: Navigating Public Debt in 2026
Thailand is preparing for a new fiscal year with a carefully planned borrowing strategy. The government anticipates needing to borrow 1.2 trillion baht in fiscal 2026, a slight adjustment from the 1.22 trillion baht projected for 2025. This measured approach reflects a commitment to managing the nation’s debt while continuing to invest in crucial economic and social advancement.
This borrowing plan isn’t a single undertaking, but a multifaceted strategy divided into six key components. Each element is designed to address specific financial needs and maintain fiscal obligation.
The largest portion, 860 billion baht, is allocated to cover the budget deficit. This adheres strictly to the Public Debt Management Act, ensuring borrowing remains within legally defined limits – no more than 20% of total budget expenditures plus 80% of debt repayment costs.
An additional 80 billion baht will be carried over from unexecuted borrowing requests in fiscal 2025. This efficient use of previously approved funds avoids unnecessary new debt issuance.
Specific projects also require dedicated funding. Approximately 11.4 billion baht will be borrowed under Section 22 of the Public Debt Management Act, earmarked for vital improvements within the Public Health Ministry and the Department of rural roads. These investments are crucial for long-term societal well-being.
Relending to state agencies represents another notable portion, totaling 51.6 billion baht. The state Railway of Thailand will receive 36.3 billion baht, while the Mass Rapid Transit Authority of thailand is allocated 15.2 billion baht, supporting critical infrastructure upgrades.
Managing treasury liquidity is also a priority, with 113 billion baht allocated for this purpose. This ensures the government can meet its short-term financial obligations smoothly.
state-owned enterprises plan to contribute 89.9 billion baht through new domestic borrowing. This diversified approach spreads the financial responsibility across various sectors.
Beyond new borrowing, the government will actively manage its existing debt. A plan to refinance or rollover 1.88 trillion baht in fiscal 2026 aims to reduce costs and bolster overall fiscal stability. Simultaneously, the government and state-owned enterprises intend to repay 503 billion baht in principal and interest.
Thailand’s public Debt Landscape: A Current Overview
As of August, Thailand’s total public debt stands at 12.16 trillion baht, representing 64.6% of the nation’s GDP. While this remains below the debt ceiling of 70% of GDP,the recent increase warrants careful attention. The debt burden substantially increased following the economic challenges of 2020-2021.
The pandemic necessitated special borrowing laws to mitigate the economic fallout, reaching a peak of 1.5 trillion baht. This surge temporarily exceeded the then-existing debt ceiling of 60%, prompting the Gen Prayut Chan-o-cha administration to raise it to the current 70%.
This rapid increase in public debt has not gone unnoticed by international credit rating agencies. Both Moody’s and Fitch expressed concerns regarding Thailand’s debt-servicing capacity, citing limited economic growth potential and ongoing political instability. Consequently,both agencies revised the government’s credit rating outlook from stable to negative.
Evergreen Section: Long-Term Fiscal Sustainability in thailand
Thailand’s approach to public debt management is evolving. The current strategy emphasizes a balance between necessary borrowing for development and prudent fiscal control. looking ahead, sustained economic growth, diversification of revenue streams, and continued commitment to responsible borrowing practices are essential for long-term fiscal sustainability. Strengthening institutional frameworks for debt management and enhancing transparency will further bolster investor confidence and ensure Thailand’s economic resilience. A key focus will be on attracting foreign direct investment and fostering innovation to drive economic expansion and improve the country’s debt-servicing capacity.
FAQ: Understanding Thailand’s Government Borrowing
1. What is the primary reason for Thailand’s government borrowing in 2026?
The primary reason is to cover the budget deficit and fund essential economic and social development projects, while also managing existing debt.
2. How does the Public Debt Management act influence Thailand’s borrowing?
The Act sets limits on the amount of borrowing allowed, ensuring fiscal responsibility and preventing excessive debt accumulation.
3. What impact did the COVID-19 pandemic have on Thailand’s public debt?
The pandemic led to a significant increase in public debt due to special
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