TDRI warns against raising Thailand's public debt ceiling above 70%

Think tank cautions debt expansion would be short-term stimulus measure that fails to address underlying economic challenges

 

The Thailand Development Research Institute (TDRI) has voiced opposition to raising the public debt ceiling beyond 70% of GDP, warning of potential financial instability.  

 

Nonarit Bisonyabut, a research fellow at the TDRI, cautioned that raising the ceiling without a robust support plan would pose a significant risk to the Thai economy.

 

The public debt ceiling serves as a key measure of financial discipline, ensuring fiscal stability in the medium to long term. Historically, Thailand has maintained a strong fiscal position, with debt levels around 45% of GDP.  

 

However, successive governments' spending measures aimed at short-term economic stimulus have eroded this position, exacerbating the country's debt situation. The COVID-19 pandemic further necessitated raising the ceiling to 70%.
  

"A high level of debt is akin to maxing out a credit card and only paying the minimum," Nonarit explained. "It means you're paying interest instead of having funds for other priorities." He questioned the wisdom of relying on temporary debt expansion to address economic challenges.

 

Nonarit argued that increasing the debt ceiling was justifiable only if the government invests in projects for long-term economic growth. He drew a parallel with taking out a loan for education or machinery – investments that yield future returns. However, the current government's focus remains on short-term stimulus programmes lacking sustainability, he said.
  

Finance Minister Pichai Chunhavajira acknowledged the temptation to raise the debt ceiling given limited fiscal space. However, he stressed the need to improve financial management and tax collection before considering such a move.

 

Pichai this week described raising the debt ceiling as a last resort. He was responding to growing support for the move from economists and banks, including SCBX and CIMB Thai Bank.

(2025/02/11-00:00)