Thailand keeps debt cap unchanged as borrowing set to rise

The Cabinet agreed today to maintain the existing cap on Thailand’s public debt at 70% of GDP, but will allow public sector borrowing to rise to between 68.03% and 70%, from 64.7% at the end of the 2025 fiscal year last September.

According to the government, the move is intended to support economic growth while maintaining financial stability.

Government spokesperson Rachada Dhnadirek said the administration attaches great importance to balancing the use of fiscal mechanisms to drive the economy with the need to maintain fiscal discipline.

She said the debt adjustment includes a plan to secure 200 billion baht in loans to cope with the negative impacts of the global oil crisis, as well as long-term borrowing to maintain the liquidity of the Oil Fuel Fund.

The adjustment means public borrowing could rise from 1.2 trillion baht to 1.4 trillion baht.

Meanwhile, the Thai private sector projected that economic growth for the full year would be between 1.2% and 1.6%, while GDP growth in the first quarter was 2.8%.

Pimjai Leeissaranukul, president of the Federation of Thai Industries, who chaired today’s meeting of the Joint Standing Committee on Commerce, Industry and Banking, said there was no clear sign that the conflict in the Middle East would end in the foreseeable future or that navigation through the Strait of Hormuz would return to normal.

She noted that, although the economy grew by 2.8% year-on-year in the first quarter, growth was limited to sectors such as digital technology products, which have expanded continuously for 12 quarters, while other sectors languished.

Due to uncertainty in the Middle East and its effects on raw materials, she suggested that the government accelerate efforts to overhaul the energy structure to reduce dependence on fossil fuels.

The private sector also called on the government to address labour shortages in the industrial sector, which may affect manufacturing and Thailand’s competitiveness.

In the short term, she said the government should speed up the renewal of work permits for migrant workers already employed in the country and develop a more effective and systematic approach to migrant labour management.