PDMO: Thailand eyes World Bank loan for low-carbon city project
Thailand plans to borrow US$200 million from the World Bank this year to support a low-carbon city project and energy transition policy.
Thailand is preparing to borrow US$200 million from the World Bank this year to support a Low Carbon City project, as the government seeks to advance its clean-energy transition and urban carbon-management plans.
Jindarat Viriyathaveekul, director-general of the Public Debt Management Office (PDMO), said on Tuesday (May 26) that the World Bank would also serve as a key adviser on greenhouse gas reduction and carbon-credit management in urban areas.
The project is expected to act as a policy sandbox for Thailand’s future energy transition efforts.
Public debt remains below ceiling
Jindarat said Thailand’s public debt currently stands at 12.7 trillion baht, equivalent to 66.4% of gross domestic product (GDP).
The level remains below the legal public-debt ceiling of 70%, leaving fiscal space for the government’s planned borrowing.
First tranche set at 35 billion baht
On the broader 400-billion-baht borrowing programme aimed at easing living costs and supporting the transition to clean energy, Jindarat said the PDMO would raise funds gradually on a monthly basis.
The borrowing schedule will follow the spending plan assessed by the Fiscal Policy Office (FPO).
The first tranche is expected to total 35 billion baht. In the initial phase, the government will focus on short-term borrowing as bridge financing, using instruments such as promissory notes (P/Ns) and term loans.
Domestic borrowing remains priority
Jindarat said the government would continue to rely mainly on domestic borrowing, citing ample liquidity in the local financial system and significantly lower costs compared with foreign-currency borrowing.
Thailand’s external debt currently accounts for only 0.74% of total public debt, she added.
Low financing cost expected
The PDMO has already opened the bidding process and is awaiting proposals from financial institutions.
The loan contracts will have a four-year term. The government may later consider restructuring the debt into long-term bonds.
Jindarat said the key advantage of the latest fundraising plan was its low financing cost. Based on Thailand’s benchmark interest rate, THOR, plus a spread, the overall interest rate is expected to be around 1.2%.
