Sun, December 05, 2021

business

Government to hike repayment in bid to rein in public debt


The government has increased debt repayment to 3 per cent of the total national annual budget in order to maintain fiscal discipline, the Finance Ministry said.

Patricia Mongkhonvanit, director-general at the Public Debt Management Office (PDMO), said the government has increased debt repayment to 3 per cent of the annual budget of Bt 3.3 trillion for fiscal year 2021 (October 2020 to September 2021).
Usually, the government earmarks about 2 per cent of total expenditure for debt payment, she noted.
In the current fiscal year, the government had originally planned principal repayment at 2.68 per cent of total expenditure of Bt3.2 trillion, but following the impact of Covid-19 on the economy, the government cut debt payment to 1.68 per cent, she explained.
According to the fiscal discipline law, debt payment will be between 2.5 to 3.5 per cent.
Meanwhile, interest payment is set at 5-6 per cent of total expenditure, in keeping with the international benchmark of less than 10 per cent.
She assured that Thai public debt was not high, currently at 45.83 per cent of gross domestic product (GDP). However, public debt will shoot up to 57.8 per cent of GDP by the end of fiscal year 2021, approaching the sustainability limit set at 60 per cent of GDP.
Thai public debt is on a rising trend as the government recently issued an emergency decree to borrow Bt1 trillion to deal with Covid-19's impact on the economy and people's  income. The government also plans to borrow an extra Bt214 billion to finance the budget deficit, originally estimated to be Bt 469 billion.
Of the Bt1-trillion loan for recovery from the impact of Covid-19, so far the government has borrowed about 33 per cent of the target. The government’s borrowing is expected to reach Bt450 billion by the end of September -- the end of the current fiscal year. The rest of the Bt550 billion will be borrowed during fiscal year 2021, she added.
The budget bill for fiscal year 2021 is pending approval in Parliament.

Published : August 30, 2020

By : The Nation