TDRI: Financial weakness leaves Thailand prey to natural disasters

The Thailand Development Research Institute (TDRI) has warned that financial constraints coupled with extreme weather patterns, have placed Thailand at risk of another catastrophic flood similar to the 2011 disaster that caused 1.1 trillion baht in economic damage.

Speaking at a seminar titled “Warning Signs of Thailand’s Financial Crisis: Is It Time for Reform?” hosted by the Economic Development Studies Center, Somchai Jitsuchon, TDRI’s director of Research on Inclusive Development, cautioned that Thailand’s financial resources may not be adequate to handle the impact of future natural disasters.

The country is currently grappling with a record-high budget deficit and unprecedented levels of public debt. The projected deficit for the 2025 budget has ballooned to 865.7 billion baht (US$25.86 billion), driven by government stimulus programmes such as the digital wallet scheme. In contrast, tax revenue has fallen from 17-18% to 13-14% of GDP over the last two decades, Somchai noted.

“In the future, I foresee increased problems in public finance. Currently, the government’s public debt stands at 64% of GDP and is expected to rise to 70%, he said.

“While some argue that 70% is not alarming, since many countries operate debt-to-GDP ratios of 100-200%, it’s essential to monitor the rate of increase. If public debt continues to rise by 3-4% per year, that would be concerning.”

Somchai said a lack of tax reform was contributing to the surge in public debt. “A soaring budget deficit also impacts the government's financial ability to respond to emergencies in the long term, as more budget will be required for recovery and relief efforts,” he said.

He highlighted the risk of extreme rainfall from the El Niño and La Niña weather patterns, saying they could lead to another natural disaster on the scale of the 2011 Great Flood.

He urged the government to overhaul the tax system to increase revenue available for disaster management.