Thailand’s c.bank says the public debt ceiling will be raised to support the economy
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BANGKOK, September 21 (Reuters) – Thailand’s increased national debt ceiling will give flexibility in implementing policies to cope with the coronavirus and support the economy as fiscal measures continue to be required, the central bank said on Tuesday.
The government on Monday raised the debt ceiling from 60% to 70% of gross domestic product (GDP) so it can raise more funds to help a flagging economy while the vital tourism sector still struggles.
The risk to budget stability is low, as the new debt ceiling is not too high and most of the national debt is associated with borrowing costs, said Deputy Governor Mathee Supapongse in a opinion.
“Raising the debt ceiling does not mean that the government has to borrow to meet the ceiling, but rather to increase flexibility in implementing measures,” he said.
“Tax measures must still play a key role in supporting people’s lower incomes and helping the economy recover quickly.”
The government’s existing plan is to borrow 500 billion baht ($ 14.98 billion) to help the recovery so that the debt ratio will be above 60% by next year, up from 55.6% today, said he.
However, the system has sufficient liquidity to support future government bond issuance, and the central bank will work closely with the Treasury Department to ensure smooth and effective fundraising, Mathee said.
The central bank predicts that Southeast Asia’s second largest economy will grow 0.7% this year, after a 6.1% decline last year.
($ 1 = 33.38 Baht)
(Reporting by Orathai Sriring and Satawasin Staporncharnchai Editing by Ed Davies, Martin Petty)
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