IMF advises Thailand to reinstate 60% debt ceiling

Thailand’s public debt remains elevated and is edging closer to the fiscal ceiling, posing growing risks to the economy despite staying just within the legal limit.

According to the Public Debt Management Office (PDMO), public debt stood at 12.12 trillion baht as of July 31, 2025, equivalent to 64.49% of GDP. This is still below the statutory ceiling of 70%, but officials caution that the burden could rise further amid slower economic growth and weaker revenues.

Breakdown of the debt includes:

1. Government borrowings and guarantees: 10.87 trillion baht
2. State enterprise debt: 1.03 trillion baht
3. Financial state enterprise debt (with government guarantees): 158.75 billion baht
4. Other public agency debt: 60.26 billion baht

A government source noted that before the COVID-19 crisis, Thailand’s public debt-to-GDP ratio was under 40%. The pandemic forced the government to borrow 1.5 trillion baht while GDP contracted, pushing the ratio above 60% for the first time.

Although the ceiling was temporarily raised to 70% to accommodate emergency spending, officials acknowledge the ratio is unlikely to fall back below 60%. Instead, it risks creeping closer to the limit due to sluggish domestic growth, revenue shortfalls, weaker-than-expected tourism income, and rising government expenditure.

Thailand’s rising debt threatens medium-term fiscal plan, rating outlook

Thailand’s steadily increasing public debt is beginning to strain the government’s medium-term fiscal framework, with the debt ratio expected to hit the ceiling sooner than previously projected.

Under earlier forecasts, public debt was set to reach the 70% of GDP ceiling by fiscal year 2029. However, according to government sources, a revision of the medium-term fiscal plan later in 2025 may show the threshold being reached as early as 2027, two years ahead of schedule. Such a development could weigh on assessments by international credit rating agencies.

The same sources noted that the previous government approved a higher debt-service-to-revenue ratio, raising the cap from 35% to 50%. This gave the state greater borrowing capacity without a matching rise in revenue, a factor closely monitored by rating agencies.

Analysts warn that Thailand faces a real risk of a downgrade, given the criteria typically applied by global rating firms. Key concerns include the rising debt trajectory, subdued economic growth, missed revenue targets, and continuing political uncertainty.

IMF urges Thailand to refrain from raising public debt ceiling

The International Monetary Fund (IMF) has cautioned the Thai government against further raising its public debt ceiling, warning that the country’s fiscal space has narrowed following large-scale stimulus measures during the COVID-19 pandemic.

In its report “Assessing Thailand’s Debt Ceiling – Is There Room for Adjustment?”, the IMF noted that Thailand’s public debt rose to 63% of GDP by the end of fiscal year 2024 and is expected to remain elevated. The current ceiling of 70% of GDP was raised from 60% in September 2021 to accommodate pandemic-related spending.

While the ratio is still below the ceiling, the IMF stressed the importance of fiscal prudence to ensure sufficient space to absorb future shocks. It estimated Thailand’s debt limit, the threshold beyond which debt becomes unsustainable or undermines economic growth, at between 77% and 87% of GDP, with a median of 82%.

However, the IMF argued that an appropriate ceiling should include a “safety margin” to act as a buffer against macroeconomic risks. Its simulations factored in contingent liabilities of around 3% of GDP every six years and additional spending needs of 0.7% of GDP annually for climate adaptation, human capital investment and ageing-related costs. When these were included, the sustainable debt ceiling for Thailand could fall to around 66% of GDP.

The IMF added that if external shocks become more frequent or if larger fiscal stimulus packages are required, Thailand would need to expand its safety buffer and set the debt ceiling even lower.

IMF urges Thailand to reinstate 60% debt ceiling, warns of rising off-budget liabilities

With Thailand’s public debt ratio edging close to the 70% ceiling, the IMF has advised the government to bring debt back below 60% of GDP over the medium term and to reinstate the 60% cap. The recommendation aims to preserve fiscal space for future crises.

The IMF also called for an overhaul of Thailand’s fiscal framework, suggesting a risk-based approach in which deficit targets become stricter as debt nears the ceiling. This would help strengthen fiscal discipline and reduce vulnerability to shocks.

Concerns over off-budget borrowing

The Fund warned that transparency must be improved to avoid “debt surprises”, especially from off-budget borrowing. During the pandemic, the government approved a 1.5-trillion-baht package — equivalent to 8.9% of GDP in fiscal year 2019 — outside the budget process. While the measure enabled rapid crisis response, it reduced transparency and accountability in public finances.

The IMF further highlighted quasi-fiscal operations under Section 28 of the Fiscal Responsibility Act, such as subsidies channelled through state-owned enterprises. These, it said, weaken expenditure control and add to debt pressures. The Fund recommended that Thailand improve reporting on the scope of off-budget measures and assess potential contingent liabilities more systematically to ensure fiscal transparency.

NESDC urges fiscal reform to safeguard against future crises

Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), has called for comprehensive fiscal reforms to strengthen Thailand’s resilience before a potential crisis emerges.

He noted that the Thai economy is expanding amid mounting challenges, including global trade and investment volatility, a fully aged society, rapid digital transformation and intensifying climate change. At the same time, fiscal space is narrowing due to declining revenue collection and rising public expenditure, pushing public debt higher. This, he warned, risks constraining economic growth and undermining the country’s credibility.

Key reform priorities

The NESDC recommended a series of fiscal reforms:

• Revenue restructuring through regulatory improvements to capture new income sources and revising tax rates where appropriate.
• Spending efficiency by reviewing public expenditures and shifting to more targeted welfare policies to reduce duplication.
• Structural stimulus via long-term economic development measures.
• Sustainable debt management to ensure fiscal stability.
• Public sector reform and private sector engagement to enhance competitiveness and foster sustainable growth.