Moody’s upgrades Thailand outlook to stable; Ekniti backs targeted fiscal support

Moody’s has upgraded Thailand’s credit outlook from negative to stable while affirming the country’s sovereign credit rating at Baa1, signalling improved confidence in Thailand’s economic risk balance and the direction of policy reform.

Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said Moody’s announced the move on April 21, 2026, lifting the outlook from Negative Outlook to Stable Outlook and maintaining the sovereign rating at Baa1. He said the change reflects a better “balance of risks” for the Thai economy and demonstrates international confidence in Thailand’s economic policy trajectory.

Ekniti said Moody’s cited greater political stability as a key factor, helping reduce uncertainty that has weighed on Thailand in the past. He said this stability supports continuity in economic reform policies and clearer efforts to build new growth engines.

“If the government can deliver structural reforms as planned—such as making regulations more flexible and business-friendly, and liberalising the energy market to boost competition—this would provide a significant tailwind for Thai growth and help the fiscal position gradually improve,” he said.

On external risks, Ekniti said pressures have begun to ease, particularly concerns surrounding US reciprocal tariff measures, which have moderated following negotiations. He said this has helped bring tariff levels on Thai exports back to a more competitive range, broadly comparable with regional peers.

He added that while the global energy price shock has increased pressure on the economy and public debt, Moody’s views Thailand’s overall risk profile as still broadly in line with other countries holding similar credit ratings.

Ekniti said private investment has continued to show signs of recovery, supported by a sharp rise in investment promotion applications and government efforts such as Thailand Fast Pass, which has helped accelerate real investment since Q4 last year. He said investment is a crucial piece in strengthening Thailand’s long-term growth potential, which has previously been viewed as a weak point.

On fiscal strength, Ekniti said Moody’s expects Thailand’s government debt-to-GDP ratio to rise to around 60% and 62% in fiscal years 2026 and 2028, respectively, as deficit spending is used to support the recovery. However, he said Thailand’s debt servicing capacity remains solid, supported by deep domestic capital and bond markets that can fund government borrowing across economic cycles.

He said most of Thailand’s debt is baht-denominated and has a relatively long average maturity, helping the government manage its debt burden. Moody’s expects the interest-to-revenue ratio in fiscal year 2026 to be about 6%, which Ekniti said is lower than peers in the same rating category.

Thailand’s external position also remains strong, he said, serving as an important buffer. As of March 2026, Thailand’s international reserves were reported at more than US$23.8 billion, sufficient to cover around seven months of imports of goods and services. The ratio of short- and long-term debt due relative to reserves is expected to be around 45-50% in 2026, which he said should be adequate to absorb external volatility.

Moody’s will continue to monitor Thailand’s growth potential, structural reform progress and fiscal management closely, he added.

Ekniti said the assessment underlines that Thailand’s economic fundamentals and stability remain strong, and that the government’s policy direction is on track—particularly its emphasis on targeted fiscal support to help households and cushion short-term impacts, while accelerating longer-term economic restructuring.

He said a key focus for rating agencies going forward will be policy continuity and effective execution that delivers concrete results, strengthening Thailand’s economic potential and resilience in a sustainable way.