Government Plans B2.6 Trillion Borrowing for 2025 Fiscal Year
Published: 18 Sep 2024 at 14:39
The government has announced a borrowing plan of 2.59 trillion baht for the fiscal year 2025, emphasizing that this borrowing will not hinder private sector fundraising efforts, according to a Ministry of Finance spokesperson.
This debt strategy for the upcoming fiscal year, beginning October 1, is not expected to alarm financial markets. Jindarat Viriyataveekul, a public debt advisor at the ministry, reassured reporters of the government’s fiscal responsibility.
Of the total borrowing, approximately 1.1 trillion baht will be allocated for new borrowing primarily to address the budget deficit, while the remaining funds will focus on refinancing and restructuring existing debts.
The administration, led by Prime Minister Paetongtarn Shinawatra, has proposed a total budget of 3.75 trillion baht for the 2025 fiscal year, marking a 7% increase over the 2024 budget to stimulate economic growth.
As the second-largest economy in Southeast Asia grapples with persistent household debt, stagnant exports, and a manufacturing sector impacted by inexpensive imports from China, this fiscal strategy aims to address these challenges.
The 2025 borrowing blueprint includes 1.25 trillion baht in sovereign bonds, 140 billion baht from bond switching, 520 billion baht in Treasury bills, and 120 billion baht in savings bonds, with promissory notes and term loans filling any remaining gaps.
Rising Public Debt
Public debt is projected to reach 66% of the gross domestic product by the end of September next year, assuming a 3% economic growth rate, according to Finance Minister Pichai Chunhavajira. This figure remains below the legal limit of 70% but reflects an increase from 63.7% reported in July 2024.
The government plans to introduce dollar-denominated bonds in its 2025 borrowing strategy; however, a prior attempt to issue dollar-denominated debt earlier this year was abandoned due to unfavorable market conditions.
Officials anticipate revenue of 2.88 trillion baht for the new fiscal year, resulting in a budget deficit of 865 billion baht. Despite the higher deficit, 908 billion baht is allocated for investments, marking a significant 27.9% increase compared to the 2024 fiscal year.
Additionally, 152.7 billion baht of the budget is designated for the second phase of a digital wallet consumption stimulus program, with the first phase costing roughly 145 billion baht set to launch next week.
An additional 132 billion baht is expected to be sourced from the management of other budgets, including the central budget and unutilized funds from various agencies.
