Bangkok: A scan of Thailand's fiscal status reveals a growing reliance on borrowing as traditional loan mechanisms prove insufficient.

According to Thai News Agency, Professor Veera Teerapat has described the Thai economic situation as "extremely precarious." External factors, such as the conflict in the Middle East impacting energy prices, are influencing domestic costs. This makes reducing fuel prices at gas stations challenging, compounding the strain on Thailand's fiscal health. More troubling, however, is the internal state of the government's own fiscal position.

The government is currently grappling with revenue shortfalls, having already utilized approximately 70 billion baht from the treasury for expenditures. There is a push for various government agencies to return unused budget allocations by April 30th. This includes carry-over funds and unused investment budgets, which will be consolidated and reallocated through the 2026 Budget Transfer Act. Additionally, plans for constructing new office buildings are being scaled back due to concerns about unfinished or underutilized infrastructure and future maintenance costs. Leasing private buildings is being considered as a cost-saving measure.

A significant point of debate is the proposal to increase the public debt ceiling from the current 70% of GDP. Reports suggest it could be raised to 75% or even 80%, allowing for more borrowing capacity. With Thailand's GDP around 19-20 trillion baht, a 1% increase in the debt ceiling would enable an additional 200 billion baht in borrowing. The government is heavily burdened with debt, with investment budgets nearly equaling the budget deficit. Most current investments are funded through borrowing rather than tax revenue. Moreover, there is about 1.2 trillion baht in off-budget debt under Section 28, awaiting budget allocation for government agencies that have made advance payments.

For large-scale economic stimulus projects requiring substantial funding, there are discussions about issuing an emergency decree to authorize significant borrowing by the Ministry of Finance. Although the Permanent Secretary of the Ministry of Finance has not confirmed such an order, legal and budgetary departments are already exploring procedural steps. The government's efforts are currently centered on managing the situation within the medium-term fiscal plan framework.

The plan includes measures to increase revenue, such as raising the Value Added Tax (VAT) from 7% to 8.5% and eventually to 10%. There is also an emphasis on reducing direct borrowing by promoting public-private partnerships (PPP) and allowing state enterprises to use their assets to establish infrastructure funds for fundraising, rather than resorting to further borrowing.

Thailand's fiscal situation is critical, with the government balancing the need to stimulate the economy against the necessity of maintaining fiscal discipline. If economic growth stalls and revenue collection falls short, borrowing will become an unavoidable solution, leading to increased burdens of interest and principal repayments in the future.