At a Cabinet meeting on Tuesday 28 September 2021, the Thai Cabinet approved new borrowing of THB 1.34 trillion for the 2022 fiscal year, starting this coming October.
The borrowing is in accordance with the government’s wider public debt management plan which includes management of a debt of THB 1.5 trillion and finance of a THB 339 billion debt. The management plan will be implemented in the hopes of reviving and stimulating the economy amidst continuing COVID-19 outbreaks, with some of the borrowing to be used to repay the budget deficit of THB 700 billion.
Following the debt plan, Thailand’s public debt is set to reach 62.69% of gross domestic product (GDP) by the end of the 2022 fiscal year. Recently, the government announced in the Royal Gazette that it will lift its public debt ceiling from 60% to 70% of GDP for more fiscal flexibility, as written in Mahanakorn Partners Group’s earlier article outlining the raise in public debt cap to aid economic recovery.
The Bank of Thailand (BoT) has also recently announced further measures to help reduce interest rates on consumer loans for retail debtors. The BoT expects to introduce these debt consolidation measures, along with increased incentives, around the middle of next month.
Deputy Director at the BoT, Oramone Chantapant stated that while the BoT has not ruled out cutting the ceiling rate of loans as a policy option, it is likely that the debt consolidation measures will be more useful as cutting the ceiling rate may push debtors with bad credit to borrow outside the financial system.