Thailand’s public debt and budget deficit ratios to GDP are projected to decline as the economy recovers from the pandemic, according to credit rating agency Moody’s.
Finance Minister Pichai Chunhavajira will present a medium-term fiscal plan to the Cabinet this week, aiming to maintain and potentially reduce the deficit over the next four years.
Moody’s Investor Service is currently reviewing Thailand’s credit rating, with a report expected in early 2025. However, concerns remain regarding increasing fiscal risks that could impact the country’s creditworthiness.
The State Monetary and Fiscal Policy Committee recently convened to discuss the medium-term fiscal plan (2026-2030), focusing on reducing the budget deficit ratio over the next four years.
Jindarat Viriyataveekul, public debt advisor at the Public Debt Management Office (PDMO), highlighted key factors influencing Thailand’s credit rating. These include the implementation of fiscal consolidation measures, particularly the ratio of public debt to Gross Domestic Product (GDP) and the fiscal deficit to GDP ratio compared to peer countries.
Thailand’s current general public debt level, as defined by the International Monetary Fund (IMF), excluding state-owned enterprise debt but including local government debt, stands at 58% of GDP, which is considered relatively low.
However, the public debt ratio as defined by the Public Debt Management Act 2005 is projected to reach 65.6% of GDP by 2025, approaching the 70% ceiling set by the Fiscal and Financial Discipline Act 2018.
“The credit rating agency expects the government’s budget deficit to decline following the Covid-19 situation, leading to a decrease in the government debt-to-GDP ratio,” Jindarat said .
The level of public debt is significantly influenced by economic growth. While many countries have experienced economic recovery and a subsequent decline in debt ratios, Thailand’s economic growth remains sluggish.
However, the approval of the 2026-2030 medium-term fiscal plan, if deemed appropriate, will contribute to a reduction in the budget deficit and positively impact the country’s credit rating.
Currently, all credit rating agencies assign Thailand a BBB+ rating with a stable outlook. The outcome of Moody’s upcoming rating review will be closely monitored.
However, key concerns remain.
Debt restructuring
In fiscal year 2025, the government faces a total debt burden of 299 billion baht, comprising 88 billion baht in principal and 210 billion baht in interest. A significant portion of this burden stems from short-term loans acquired during the Covid-19 pandemic.
The government plans to gradually restructure these short-term debts into long-term obligations with maturities of 10-15 years, compared to the current average debt maturity of 9 years and 9 months.
Four-year plan to reduce fiscal deficit
The State Fiscal and Monetary Policy Committee, chaired Pichai, met on Thursday (December 19) to discuss the draft medium-term fiscal plan for fiscal years 2026-2030. The plan will be submitted to the cabinet meeting tomorrow.
Minister Pichai emphasised that the fiscal plan prioritises maintaining and potentially reducing the deficit size over the next four years. New debt generation will be kept within the 70% of GDP limit outlined in the fiscal and financial discipline framework.
Economic growth will be a key driver in stabilising Thailand’s fiscal position. The government will focus on stimulating four key economic engines: tourism, private consumption confidence, investment, and exports.
“The government must accelerate efforts to boost these economic drivers through various measures, including expenditure stimulation, accelerated investment, and addressing critical areas such as land availability, clean energy, and export sector support mechanisms,” Pichai said.