Thai Government Set to Revise Fiscal Framework as Energy Crisis and Slowing Growth Loom
Public Debt Management Office eyes medium-term review to maintain fiscal discipline, capping budget deficits at 3 per cent of GDP despite fuel fund strain
- The Thai government is reviewing its medium-term fiscal framework and debt management plan to address challenges from a domestic energy crisis and slowing economic growth.
- The energy crisis has caused the Oil Fuel Fund to run a deficit of approximately 12,000 million baht, with potential borrowing to stabilize prices contributing to public debt.
- Downward revisions of GDP growth forecasts are a key concern, as a smaller GDP increases the public debt-to-GDP ratio, which currently stands at 66%.
- A primary goal of the fiscal review is to maintain discipline by capping the budget deficit at 3% of GDP to protect Thailand's sovereign credit rating.
Public Debt Management Office eyes medium-term review to maintain fiscal discipline, capping budget deficits at 3 per cent of GDP despite fuel fund strain.
The Thai government is preparing a comprehensive review of its medium-term fiscal strategy to navigate the dual challenges of a domestic energy crisis and decelerating economic growth.
The Public Debt Management Office (PDMO) confirmed that it will reassess the national debt management plan and the Medium-Term Fiscal Framework (MTFF) to align with the new administration’s priorities.
Jindarat Viriyataveekul, director-general of the PDMO, addressed concerns regarding the impact of Middle East tensions on domestic energy prices.
She revealed that the Oil Fuel Fund has entered a deficit of approximately 12,000 million baht.
To stabilise fuel prices, the fund may utilise its existing mechanism to borrow within a limited 20,000 million baht bracket. As the fund is a state-supervised entity, any such borrowing is officially categorised as public debt.
Fiscal Buffers and Debt Thresholds
Despite the mounting pressure on the energy fund, Jindarat assured that Thailand’s fiscal position remains resilient.
"National public debt currently stands at approximately 66 per cent of GDP," she stated. "When measured against our statutory debt ceiling, there remains sufficient fiscal space to accommodate necessary borrowing."
However, she expressed caution regarding recent downward revisions of GDP growth forecasts by various economic agencies. A smaller GDP denominator naturally elevates the debt-to-GDP ratio, a metric closely watched by international observers.
Upholding Credit Credibility
In response to these shifting economic variables, the PDMO and the Fiscal Policy Office (FPO) are coordinating a review of the MTFF as part of the preparations for the 2027 fiscal budget. A key pillar of this review is the commitment to fiscal discipline.
The PDMO aims to maintain a budget deficit of no more than 3 per cent of GDP, a critical benchmark used by global credit rating agencies to assess Thailand’s sovereign creditworthiness.
Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, has issued clear policy directives on this front.
While acknowledging that extraordinary circumstances may arise, the Ministry’s stance is that any deficit exceeding the 3 per cent threshold must be accompanied by a transparent, time-bound plan to bring spending back within the established limit.
