Thailand: Government considers local, foreign borrowing of THB1tr

  • The Finance Ministry said it will explore domestic and foreign funding options for planned borrowing of THB1tr to finance a major economic stimulus programme.
  • The debt is a key element of a THB1.9tr package to help low-income households, farmers and companies reeling from the impact of the novel coronavirus outbreak.
  • “We’ll explore all possibilities,” Patricia Mongkhonvanit, director-general of the ministry’s Public Debt Management Office, said in an interview. “We won’t borrow all THB1tr at once. We’ll proceed gradually, as the funding need arises.”
  • The scale of the borrowing led to questions about how the government would achieve it. Ms Patricia said the ministry is looking at a mix of instruments, including government bonds, treasury bills, promissory notes, term loans and savings bonds.
  • Tapping international organisations like the Asian Development Bank and foreign debt markets are also options, but Ms Patricia said: “Our objective is mainly to tap the local market first […] There is ample domestic liquidity and demand for our products.”
  • A pending executive decree will permit the fund-raising efforts to run through Sep 21, a time-frame designed to give officials flexibility since the duration of the outbreak is uncertain. The THB1tr additional borrowing is more than double the average annual budget deficit of recent years, according to Australia & New Zealand Banking Group.
  • The administration will look at short- and long-term instruments, and the issue-size of savings bonds will likely top the usual THB50bn per year, Ms Patricia said. Officials are also evaluating the strengths and challenges of foreign-currency debt, though currency risks are a factor in the latter case.
  • International organisations “have very good packages and we’re in talks with them,” Ms Patricia said, adding “their interest rates are quite competitive after swapping back to our currency.”
  • The extra borrowing under the stimulus plan won’t be accounted for in the government’s regular fiscal deficit because it falls under a special law, meaning it will be treated separately, she said.

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