New bill to boost govt’s loan capacity
THE NATIONAL Legislative Assembly (NLA) will today deliberate on a new public debt bill which excludes debts of the Bank of Thailand and state-owned financial institutions, among others, to expand the government’s capacity to borrow from capital markets.
Voraphol Sokatiyanuluk, NLA vice chairman of the committee on the new public debt bill, said the proposed legislation has a total of 15 articles, which will clearly redefine the country’s public debt.
Thailand’s public debt as of July 31 this year stood at Bt6.22 trillion or 41.83 per cent of GDP.
According to the bill, public debt would no longer be included as obligations of state-owned financial institutions, the central bank, as well as those of asset management and credit guarantee agencies which are currently not directly guaranteed by the Finance Ministry.
As a result, the country’s public debt will come down under the new definition.
The Finance Minister will chair the national policy committee on public debt management, while a deputy finance minister will be vice chairman with committee members including the permanent secretary for finance as well as chiefs of the National Economic and Social Development Board, Budget Bureau, Comptroller-General’s Department, Fiscal Policy Office, and Bank of Thailand.
The bill also expands the powers of the Public Debt Management Office to cover analysis of debt of local administrative organisations and state-owned financial institutions involved in lending, asset management and credit guarantee businesses.
In addition, the bill empowers the government to invest more diversely in various assets as part of the state’s fund on public debt management and development of domestic debt instrument markets.
At present, investment options of this fund are limited so the bill will allow the government to invest in the central bank’s debt instruments and other assets, for example.Of the Bt6.22-trillion public debt, about Bt4.8 trillion are government debt, while debt owed by state-owned enterprises amounted to more than Bt900 billion.
About 95 per cent of the total public debt are domestic obligations while the rest include external borrowings.
According to bond market adviser Theeraj Athanavanch, 89 per cent of the country’s public debt have long-term maturity while only Bt659 billion have short-term maturity.
Public debt as a percentage of GDP is a key indicator of the |country’s economic and financial stability.
