Govt unfazed by jump in policy rate, says it will not affect its public debt
The Monetary Policy Committee (MPC)'s decision to raise the key interest rate will not affect the government’s public debt, the deputy government spokesperson said on Sunday.
Rachada Dhnadirek made this remark after the MPC announced on Wednesday that it was raising the policy rate by 25 basis points to 0.75 per cent.
She said the Public Debt Management Office (PDMO) had come up with a plan to deal with the risk of rising government borrowing costs owing to the interest rate hike.
She said the government is not affected by the hike’s impact on the currency exchange because only 1.8 per cent of its debt is foreign.
“The government has already taken steps to prevent all risks related to the currency exchange rate,” she said.
Rachada added that the government will issue long-term bonds in the 2023 fiscal year. The volume of long-term bonds will rise from 45 per cent in fiscal 2022 to 48 per cent in fiscal 2023, she explained.
Also, she said, the volume of treasury bills and short-term borrowing will drop from 18 per cent to 14 per cent.
Rachada said the ratio of public debt to gross domestic product (GDP) at the end of June stood at 61.06 per cent as per the PDMO.
"PDMO expects the public debt to GDP ratio to stand at 61.3 per cent by the end of fiscal 2022 as the value of GDP has risen, while the government has revised all public debt management plans," she said.
She added that government banks have been asked to maintain their current loan interest rates for as long as possible and launch measures to take care of debtors who are still suffering from the fallout of the pandemic.