Thailand raises national debt cap in order to combat COVID-19 pandemic

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Thailand’s public debt-to-GDP ratio has been raised from 60 percent to 70 percent, according to the finance minister, allowing the government to raise more funds to help a failing economy. The Southeast Asian nation is suffering with its largest COVID-19 outbreak to date, and harsher containment measures have hampered economic activity, albeit some have been relaxed.

The increased debt cap will allow the government to borrow more for fiscal measures in the medium term if necessary, while retaining solid debt servicing ability, according to Finance Minister Arkhom Termpittayapaisith in a statement. The fiscal and monetary policy committee, chaired by Prime Minister Prayuth Chan-ocha, authorized the new debt limit. It will be evaluated every three years at the very least.

The debt-to-GDP ratio was 55.59 percent in July. Despite extensive borrowing to finance the epidemic response, Arkhom reported last month that Thailand’s debt-to-GDP ratio remained low in comparison to other countries. Since the outbreak, the government has undertaken a variety of stimulus and relief measures, borrowing 1.5 trillion baht ($45.86 billion), including a 500-billion-baht plan authorized this year.

Last month, Bank of Thailand Governor Sethaput Suthiwartnarueput stated that the country would require an additional 1 trillion baht in fiscal measures to assist cushion job and income losses. The finance ministry predicts 1.3 percent growth for Southeast Asia’s second-largest economy this year, while the central bank predicts 0.7 percent growth. Last year, the GDP shrank by 6.1 percent, the most in more than two decades.