Arkhom: The increase in debt is not a problem
The State has sufficient repayment capacity
A worker plants vegetables on the roof of an unused taxi due to the business crisis caused by the coronavirus pandemic at a taxi garage in Bangkok on September 16, 2021 (Reuters Photo)
The government should have no problem repaying public debt, even if it borrows more in the future, said Finance Minister Arkhom Termpittayapaisith.
The decision of the State Monetary and Fiscal Policy Committee to raise the ceiling on the public debt-to-GDP ratio from 60% to 70% will allow more borrowing to rehabilitate an economy affected by the protracted pandemic, he said.
The committee is made up of representatives from the Ministry of Finance, the Bank of Thailand, the National Council for Economic and Social Development and the Budget Office.
Mr. Arkhom said raising the ceiling gives the government more leeway to borrow more than 1,200 billion baht.
However, the government will only consider borrowing more when necessary, he said. This decision does not mean that the government intends to borrow the entire amount.
The minister said the country has a strong debt repayment capacity. The ratio of net public debt to the estimated annual net government revenue is 31.8%, below the ceiling of 35%.
In addition, the share of public debt denominated in foreign currencies is only 1.67% against a ceiling of 10%.
Mr Arkhom said that the law governing monetary and fiscal discipline obliges the Budget Office to allocate 2.5-4% of annual expenditure to repaying the principal of the debt.
The bureau has set aside 100 billion baht in FY2022 for principal repayment and an additional 200 billion for interest.
He said the government is expected to spend 140 billion baht this year on the 500 billion borrowings under the second emergency lending decree.
Some 120 billion baht have already been borrowed.
The remaining 360 billion baht will be spent in fiscal year 2022, which begins next month, Arkhom said.
The government issued its first emergency lending decree last year to authorize the borrowing of 1,000 billion baht to finance its stimulus packages in response to the pandemic.
A second decree was issued this year to allow the government to borrow an additional 500 billion baht.
He said borrowing the first trillion baht is expected to push the government debt-to-GDP ratio to 59 percent this month, from 55.6 percent in July.
If the government borrows the remaining 300 billion baht next year under the 500 billion baht decree, public debt could exceed the 60% cap in 2022, Arkhom said.
The Bank of Thailand believes it is necessary to raise the ceiling on the public debt-to-GDP ratio to provide more fiscal space for the government to better manage the pandemic and improve the economy, said Mathee Supapongse, vice-governor of the central bank for monetary policy. stability.
He said the government should focus on budget spending for stimulus programs to help the economy, returning to reduce the public debt ratio to below 60% at a later date.