Thailand: Prime Minister justifies privatization of national debt

IN BRIEF

• Thailand: Public debt ceiling raised to 70% of GDP. Objective: to allow the government to borrow more to boost the economy. Prime Minister Paetongtarn Shinawatra reveals a personal fortune of nearly €400 million. Thailand’s current public debt stands at 61% of GDP. Confidence in debt management remains despite the ceiling increase. Economists are concerned about future budgetary management. Thailand’s economic situation is currently marked by significant challenges, particularly in terms of national debt management. In a context where the public debt ratio exceeds 60% of gross domestic product (GDP), Prime Minister Paetongtarn Shinawatra has taken the initiative to advocate for the partial privatization of this debt. This decision aims to provide viable solutions to revive an economy severely affected by successive crises, while meeting the demands of growth and sustainability. Thai Prime Minister Paetongtarn Shinawatra recently spoke to justify the government’s decision to raise the public debt ceiling to 70% of gross domestic product (GDP). This initiative aims to allow for increased borrowing to support the Thai economy, which has been severely affected by the COVID-19 pandemic. With an updated national debt, fiscal and economic challenges become more critical, but also more manageable, according to the government’s analysis.
• A Renewed Fiscal FrameworkThe Thai government has implemented a new Medium-Term Fiscal Framework, the MTFF. , which runs from 2025 to 2029. This framework provides a detailed analysis of public debt projections, which have already crossed the threshold of 61% of GDP. Economists at Kiatnakin Phatrax Bank point out that raising the debt ceiling could be a response to growing economic challenges, including private debt exceeding 90% of GDP. This decision aims to improve fiscal flexibility to support investment in critical sectors.Economic Impacts of Debt PrivatizationPrivatizing the national debt can also be seen as a way to improve Thailand’s economic climate. By freeing up additional funds through borrowing, the government hopes to boost investment and stimulate the economy. Moreover, this strategy could bring long-term benefits if managed well. Jindarat Viriyataveekul, public debt advisor at PDMO, stated that this level of debt remains acceptable, as long as it does not exceed the threshold of 70% of GDP.
• Transparency in the Declaration of InterestsIn parallel with these economic decisions, Paetongtarn Shinawatra recently declared a personal fortune of approximately €400 million, which has generated interest and even controversy. This public declaration appears intended to increase transparency and reassure the public about the Prime Minister’s integrity. However, whether the size of her fortune affects the perception of the management of the national debt remains open to debate. Future Challenges for ThailandPublic debt management in Thailand is a central economic concern, and the challenges are numerous. The global context
• The pandemic’s repercussions continue to put pressure on public finances. With worrying projections regarding the fiscal trajectory and debt commitments, it is essential for the government to skillfully navigate these uncertainties while ensuring that resources are used wisely to foster economic growth. Looking Ahead As Thailand moves into an era of significant economic change, policy decisions such as this one by Paetongtarn Shinawatra could define the country’s fiscal trajectory. Privatizing the national debt could offer a potential solution to stimulate the economy, but it requires careful management to avoid long-term adverse consequences. The government will need to maintain a balance between increasing debt and meeting the growing economic needs of the population. Economic Rationale: Privatizing the national debt is presented as a solution to stimulate growth.
• Management Improvement : Facilitating more efficient and transparent management of public finances. Attractiveness for investors : Create a favorable environment to attract foreign capital.
• Reduction of public costs : Reduce the financial burden on the state by transferring responsibilities to private entities. Encouragement of innovation