THE FINANCE Ministry expects Thailand's public debts not to exceed 46 per cent of gross domestic product in fiscal year 2016 if all state agencies go ahead with their investments as planned.
Suwit Rojanavanich, director-general of the ministry’s Public Debt Management Office, said the public debt so far remained within the fiscal-sustainability framework of 43.5 per cent of GDP set early this year.
At the end of September, the country’s public debt was 42.99 per cent of GDP, or Bt5.78 trillion. Of that total, about Bt5.42 trillion or 93.77 per cent was domestic debts and the remaining Bt360.28 billion or 6.23 per cent external.
A total of 96.42 per cent were long-term debts and the remaining 3.58 per cent short-term.
The public debt accounted for 6.54 per cent of Thailand’s foreign reserves as of September 30.
Suwit said the public debt was lower than the framework maximum after the National Economic and Social Development Board revised the base of GDP and recalculated it. Besides, some state enterprises disbursed less money for investment projects than targeted, prompting lower disbursement on borrowings. The State Railway of Thailand could not proceed with its planned tendering for double-tracking of three routes, estimated to cost between Bt20 billion and Bt30 billion.
“The good point about the low public debt is that it has not gone dramatically high. However, the disadvantage is that state enterprises’ investment disbursements have not met target, and that could affect the economic stimulus plan,” Suwit said.
By the end of the year, the public debt will not grow strongly, as all investment plans are in the procurement process and there is no real disbursement yet, he said.
In fiscal year 2015, the government’s new borrowings stood at Bt367 billion, close to the target of Bt400 billion.
State-enterprise debt restructuring has followed the plan proposed to the Cabinet at Bt780 billion. State enterprises listed on the Stock Exchange of Thailand made new borrowings and managed debt at Bt83 billion in total. Of that, Bt61 billion was new borrowings and Bt21 billion was debt management.
Suwit said that for the Bt80 billion worth of road and water projects under Phase 2 of the economic stimulus measures, about Bt24 billion had been disbursed for project investment and a total disbursement of Bt35 disbursement was planned by the end of the year.
This investment is expected to be injected into the economic system this quarter, which could result in 2015 GDP growth meeting the 3-per-cent target, he said.
He also cited the Finance Ministry’s explanation to Fitch Ratings about Thailand’s situation for the latter’s affirmation of its credit rating for short- and long-term foreign-currency debts at “BBB+” and “F2” with a “stable” outlook for long-term government debts.
Fitch Ratings is still keeping an eye on the country’s progress towards a general election in 2017 and the economic trend in the medium term.
If the military-led regime’s policies negatively affect the country’s fiscal stance, that could prompt a downgrade of Thailand’s credit ratings. However, there are no |factors for concern, given Thailand’s strong fiscal status and the government’s acceleration of investment that could be positive for economic growth in the medium term.