SHOULD the government issue an emergency decree to borrow an additional 500 billion baht Thailand’s debt-to-GDP ratio would rise to 75 percent and thereby increasing fiscal risks, People’s MP for Bangkok Dr. Anusorn Tamajai said today (April 20).
The government also has to guarantee an additional 150 billion baht for the Oil Fuel Fund while having to repay an outstanding treasury balance of approximately 70 billion baht.
This fiscal situation reflects the following:
– The country faces increasing risks and limitations on its fiscal position;
– Fiscal policy and public debt management must have a strategic goal to better cope with the energy and economic crises. All actions must be taken with caution, prudence, thoroughness, and with the participation of MPs;
– Borrowing more money or increasing public debt by another 500 billion baht and raising the public debt ceiling should be done through a parliamentary act, not an emergency decree.
Dr. Anusorn pointed out that urgent measures to help the public can be implemented through the 2026 mid-year budget by cutting unnecessary expenses as much as possible with raising the public debt-to-GDP ratio being the last resort,
Efforts must be made to reduce corruption and budget leaks, which typically average 2 to 3 hundred million baht.
“If we can plug the leaks and deter corruption by recovering even half of the money missing from the system, the need to raise the public debt-to-GDP ratio will decrease,” he said.
Moreover, raising the debt ceiling poses a risk of future credit rating downgrades for Thailand while increasing the financing costs for both the private and public sectors when raising funds in international financial markets.
Ineffective economic stimulus could also trigger a crowding out effect, he warned.
The crowding out effect is an economic theory that suggests increased government spending can reduce private sector investment by raising interest rates and taxes. Higher government borrowing can elevate real interest rates, making loans more expensive and discouraging private investment, Investopedia explained.
Budget transfers should also prioritise assisting and alleviating the suffering of vulnerable groups, not transferring funds to security agencies.
He recommended that the government focus on efficient property tax collection, which would be a crucial source of government revenue and doing so well would not affect overall economic growth while ensuring efficient use of assets, preventing land from being left vacant.
It would also further promote economic justice, he added.
CAPTIONS:
Top and Front Page – Representative image of coping with debt. Photo by Towfiqu Barbhuiya on Unsplash
Insert – People’s MP Dr. Anusorn Tamajai. Photo – Naewna
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