BOT warns proposed THB400bn borrowing must be tightly targeted as economy remains fragile
BOT Governor Vitai Ratanakorn says a large borrowing decree could lift GDP by 0.5-0.7 percentage points, but spending must be well targeted and weighed between relief and investment.
Bank of Thailand (BOT) Governor Vitai Ratanakorn on Tuesday said Thailand’s economy remains fragile and warned that any emergency borrowing decree authorising the Finance Ministry to raise around THB400 billion must be designed to deliver maximum impact through tightly targeted measures.
Commenting on the government’s plan to borrow funds to stimulate the economy and cushion the impact of higher energy prices linked to tensions in the Middle East, Vitai said the BOT’s preliminary assessment—based on a THB300 billion framework—suggested the package could lift GDP growth by about 0.5-0.7 percentage points, from a baseline projection of 1.5% for this year.
Vitai said the government should carefully weigh spending between short-term relief and long-term investment. Relief measures can support the economy immediately, he said, but have limitations later because they raise the current-year GDP base, which can mechanically reduce the following year’s growth rate. Investment, by contrast, can create more durable momentum and support longer-term, more sustainable expansion.
He said Thailand’s recovery remains uneven, with low-income groups and small SMEs still under pressure from the cost of living and elevated energy costs. For that reason, he said any borrowing decree should be designed to target groups directly affected, to ensure public spending delivers the highest possible efficiency.
Vitai added that fiscal policy is currently a key tool for stabilising the economy because it can be deployed more precisely and with faster visible effects, while monetary policy tends to work more broadly and typically takes six to 12 months to show clearer results.
Cabinet approval and programme split
On April 5, 2026, the Cabinet approved a draft emergency decree authorising the Finance Ministry to borrow a total of THB400 billion, as proposed by the ministry. The borrowing plan is divided into two main programmes:
- THB200 billion for assistance to households, farmers and businesses affected by the energy crisis, and
- THB200 billion to support Thailand’s transition to alternative energy.
Public debt nearing the legal ceiling
A key issue under close watch is Thailand’s public debt position, which is approaching the legal ceiling.
The Finance Ministry reported that, as of the end of February 2026, outstanding public debt stood at THB12,595,731 million, or 66.09% of GDP. Adding the proposed THB400 billion borrowing would push the ratio to 68.18% of GDP, leaving a buffer of only 1.82 percentage points below the 70% cap.
Taking into account the impact of the Middle East conflict, the Finance Ministry has also projected that public debt could rise to 69.88% of GDP by the end of fiscal year 2027.
Screening committee and interest-cost planning
To strengthen transparency in the use of borrowed funds, the decree provides for a loan-spending screening committee, chaired by the permanent secretary for finance, with the director-general of the Public Debt Management Office (PDMO) serving as a member and secretary. The committee will review programmes and projects before submitting them to the Cabinet for approval on a case-by-case basis.
On interest costs, the Finance Ministry has tasked the Budget Bureau with preparing expenditure allocations to cover interest and debt issuance costs from fiscal year 2027 onwards.
