Is Thai finance really “broke”? Here’s the answer

Additionally, recent budget deficits, such as the 865 billion baht deficit in the 2025 fiscal year, have led many to mistakenly believe that the Thai government or its finances are "broke." However, this is not always the case.

A country is considered economically "broke" or bankrupt only when it defaults on its debt (sovereign default), triggering a public debt crisis that may force it to seek help from international organisations like the International Monetary Fund (IMF).

Thailand experienced such a crisis during the 1997 Asian Financial Crisis when the baht plunged sharply, causing foreign debt to soar beyond the government’s capacity to repay. The country then had to borrow from the IMF and underwent a decade-long debt restructuring process until 2007. Thailand continues to make payments to the Financial Institutions Development Fund to this day.

Currently, Thailand’s finances are stable and not "broke." As of 2024, the country holds international reserves of US$236 billion, enough to cover eight months of imports and approximately 2.5 times its short-term foreign debt. These indicators demonstrate Thailand’s sound fiscal stability.

Deputy Prime Minister and Finance Minister Pichai Chunhavajira stressed that Thailand’s economy is strong and attractive to investors, reflected by over US$30 billion in investments in 2024. The government aims for economic growth of 3.0–3.5%, which is normal for the region.

Deputy Finance Minister Paopoom Rojanasakul highlighted Thailand’s economic stability during a meeting with the World Bank and the IMF’s East Asia Pacific voting group. He emphasised clear policies for economic recovery and enhancing competitiveness.

However, certain risks remain. Despite fiscal stability, concerns include:

• Public debt is at 63.28% of GDP in 2024, approaching the 70% debt ceiling, which could affect future debt repayment capacity.
• Household debt is at 89.6% of GDP, potentially limiting domestic consumption and investment, thereby impacting economic growth and government revenue.
• Economic growth is below potential, possibly causing tax revenues to fall short of expectations.

• Large-scale economic stimulus measures increase fiscal burdens; without structural reforms, these could threaten long-term fiscal stability.

The Ministry of Finance has developed a 5-year strategic plan (2023–2027) to strengthen fiscal stability and address future challenges. The plan includes:

• Maintaining and enhancing macroeconomic stability by upholding fiscal discipline within a sustainable framework, developing medium- and long-term fiscal forecasting systems, implementing transparent and flexible monetary and fiscal policies, introducing new policy tools to manage economic volatility, and improving the efficiency of financial systems, including money markets, capital markets, and insurance.
• Developing tax systems and measures by improving tax structures for fairness and equity, enhancing tax collection efficiency and coverage, simplifying tax understanding for the public, using tax policies to reduce inequality and promote wealth distribution, and adjusting tax incentives and fees appropriately.
• Prudent public debt management aligned with Thailand’s fiscal position, considering cost-effectiveness, debt repayment capacity, and fiscal sustainability, alongside issuing government bonds to establish benchmark yield curves.
• Maximising public asset management efficiency through revenue generation from state land management, improving state enterprise performance, developing accurate accounting and data systems, and enhancing operational results to reduce future budget deficits.

Summary: Not Broke, but Caution Needed

Despite criticisms labelling the government as “broke” during times when treasury funds decline or budget deficits occur, Thailand’s fiscal status remains far from a crisis. Budget deficits are a normal fiscal tool that many countries use to stimulate the economy when necessary.

Thailand maintains strong international reserves and has never defaulted on its debt, unlike the 1997 Asian Financial Crisis.

However, fiscal stability should not breed complacency. Structural risks such as high public and household debt could pose long-term threats, especially if economic growth remains sluggish and tax revenues fail to recover as needed.

Large-scale economic stimulus policies must be carefully balanced with structural reforms to create sustainable revenue sources. If the Ministry of Finance successfully implements this strategic plan, Thailand’s fiscal health is expected to remain stable well into the future.