Thailand raises public debt ceiling to fight Covid-19 outbreak

Thailand has increased the ceiling of its public debt-to-gross domestic product (GDP) ratio to 70 per cent from 60 per cent, the finance minister said on Monday, allowing the government to raise more funds to help a struggling economy.

The Southeast Asian country is dealing with its biggest Covid-19 outbreak to date and stricter containment measures have hit economic activity although some have been eased from this month.

The higher debt ceiling will provide room for the government to borrow more for fiscal policies in the medium term if required, while maintaining good debt servicing ability, Finance minister Arkhom Termpittayapaisith said in a statement.

The new debt limit was approved by the fiscal and monetary policy committee, chaired by Prime Minister Prayuth Chan-ocha. It will be reviewed at least every three years.

As of July, the debt-to-GDP ratio was at 55.59 per cent.

Last month, Arkhom said Thailand’s debt-to-GDP ratio was still low compared with other countries despite significant borrowing to finance the outbreak response.

The government has introduced a range of stimulus and relief measures since the pandemic with 1.5 trillion baht ($45.86 billion) in borrowing, including a 500 billion baht plan approved this year.

Last month, Bank of Thailand Governor Sethaput Suthiwartnarueput said the country would need a further 1 trillion baht in fiscal measures to help cushion losses in jobs and income.