Finance Minister Arkhom Termpittayapaisith at a parliamentary meeting in Kiak Kai on October 27. (Bangkok Post archive photo)
The Public Debt Management Office (PDMO) has been urged to consider seeking external loans to diversify sources of credit amid increased demand from the private sector in the context of the Covid-19 crisis, the Ministry of Finance.
Foreign loans must be obtained from international financial institutions, as opposed to loans borrowed from foreign money markets, said Finance Minister Arkhom Termpittayapaisith.
The existing borrowing costs of loans from both sources are about the same, Arkhom said.
Out of the total public debt worth 7.8 trillion baht or 49.3% of GDP, the external debt is valued at 86.8 billion baht. Of this amount, 28.7 billion baht is classified as external debt for the financing of public projects and 58.1 billion is retrocessions, under which the government borrows money and lends it to someone from other.
Obtaining external loans is normal practice, he said, citing how China always seeks external loans to develop its technological capacity.
For Thailand, borrowing from external sources should focus on four main pillars, Arkhom said.
External loans should be used for projects involving high-tech transfer, public transport systems, a green economy and social investments such as healthcare and health tourism, he said.
The World Bank, International Monetary Fund, Asian Development Bank and international credit rating agencies have all agreed that Thailand still needs more investment, Arkhom said.
He said the public debt-to-GDP ratio at 49.35% remains well below the public debt ceiling of 60% of GDP.
Although the government issued the trillion baht loan decree to mitigate the negative effects of the pandemic Covid-19 crisis, the public debt-to-GDP ratio is still within limits, Arkhom said.
Growth prospects also depend on how foreign visitors are allowed to enter the kingdom since the tourism industry accounts for 12% of GDP, Arkhom said.