Thailand to borrow 2.59 trillion baht for 2025 budget

[snoop1130]

 

The Government of Thailand announced a borrowing plan of 2.59 trillion baht for the 2025 fiscal year, assuring that this will not hinder the private sector’s fundraising efforts, a Ministry of Finance official stated yesterday.

 

Jindarat Viriyataveekul, public debt adviser at the ministry, said the debt plan, which begins on October 1, should not cause concern in the markets. She explained that approximately 1.1 trillion baht (US$33 billion) would be new borrowing primarily to cover the budget deficit, with the remainder designated for refinancing and restructuring existing debt.

 

Prime Minister Paetongtarn Shinawatra’s administration is increasing the budget for the 2025 fiscal year to 3.75 trillion baht (US$113 billion), a 7% rise from 2024, aimed at stimulating economic growth.

 

Southeast Asia’s second-largest economy is grappling with near-record-high household debt, weak exports, and a manufacturing sector under pressure from inexpensive imports, mainly from China.

 

The 2025 borrowing strategy includes 1.25 trillion baht (US$38 billion) in sovereign bonds, 140 billion baht (US$4 billion) through bond switching, 520 billion baht (US$16 billion) in Treasury bills, and 120 billion baht (US$3.6 billion) in savings bonds. The rest may be covered by promissory notes and term loans.

 

Finance Minister Pichai Chunhavajira noted that public debt is projected to reach 66% of gross domestic product (GDP) by the end of September next year, assuming a 3% economic growth rate. This figure remains below the 70% legal ceiling but is an increase from 63.7% at the end of July 2024, Pichai said.

 

 

 

 

“Officials hope to issue dollar-denominated bonds as part of the 2025 borrowing programme,”

 

A plan to issue the first dollar-denominated debt in two decades earlier this year was abandoned due to unfavourable market conditions.

 

Officials have forecast revenue of 2.88 trillion baht (US$87 billion) for the new fiscal year, resulting in a budget deficit of 865 billion baht (US$26 billion). Despite the higher deficit, 908 billion baht (US$27.4 billion) is allocated for investment, marking a 27.9% increase from the 2024 fiscal year, Pichai said.

 

“152.7 billion baht (US$4.696 billion) of the budget is earmarked for the second phase of the digital wallet consumption stimulus handout.”

 

The first phase, costing about 145 billion baht (US$4.4 billion), starts next week, reported Bangkok Post.

 

Additionally, another 132 billion baht (US$4 billion) for the programme is expected to be sourced from the management of other budgets, including the central budget and unused funds from various agencies.

 

By Bright Choomanee

Picture courtesy of Bangkok Post

 

Source: The Thaiger

-- 2024-09-19
 

 

[Pouatchee]

sure they are counting on the big farang global tax scheme to pay back the loan

Edited September 19 by Pouatchee

[chiang mai]

No overseas or foreign borrowing/debt, all denominated in THB, smart.

[jonny on the spot]

They should borrow as much as they can. These low life will never pay anything back . Next coup it's the price of doing business 

[worgeordie]

5 hours ago, snoop1130 said:

Southeast Asia’s second-largest economy is grappling with near-record-high household debt, weak exports, and a manufacturing sector under pressure from inexpensive imports, mainly from China.

Seems like a good time to start borrowing money ....🤪 borrow where from i wonder ....

 

regards worgeordie

[ikke1959]

Borrowing money for digital wallet, for the annual budget. and how will they ever be able to pay it back.. Interests have to be paid too and with the tourism declining and income from it because of the tax proposals, and inflation it will be a big burden for the country in a few years..Or is Thai borrowing?? borrow and never pay back

[hotchilli]

8 hours ago, ikke1959 said:

Borrowing money for digital wallet, for the annual budget. and how will they ever be able to pay it back.. Interests have to be paid too and with the tourism declining and income from it because of the tax proposals, and inflation it will be a big burden for the country in a few years..Or is Thai borrowing?? borrow and never pay back

Borrow from Peter to pay Paul... sometime whenever....

[topt]

14 hours ago, chiang mai said:

No overseas or foreign borrowing/debt, all denominated in THB, smart.

If so then I am confused by these statements from the article -

14 hours ago, snoop1130 said:

This figure remains below the 70% legal ceiling but is an increase from 63.7% at the end of July 2024, Pichai said.

 

 

 

 

“Officials hope to issue dollar-denominated bonds as part of the 2025 borrowing programme,”

 

A plan to issue the first dollar-denominated debt in two decades earlier this year was abandoned due to unfavourable market conditions.

I read this as Pichai said (as in quotes) that they hope to issue $USD denominated bonds followed by an observation that the govt. had initially planned to do so earlier this year?

[chiang mai]

13 minutes ago, topt said:

If so then I am confused by these statements from the article -

I read this as Pichai said (as in quotes) that they hope to issue $USD denominated bonds followed by an observation that the govt. had initially planned to do so earlier this year?

I've read previously of the desire to issue US denominated bonds but as far as I'm aware it's still only a wish by a few. One of the main strengths of the Thai economy is the lesson  learned from 1997 in that 96% of debt is denominated in THB, they'd be foolish to change that.

 

EDIT TO ADD: Presumably if they do issue US denominated bonds they will be hedged back to THB in order to mitigate risk, I guess the appeal is exposure to the wider US bond market and the offshore element.

Edited September 20 by chiang mai

[black tabby12345]

18 hours ago, Pouatchee said:

sure they are counting on the big farang global tax scheme to pay back the loan

 

Or they are already predicting the failure of that unrealistic tax idea mouthed by the tax chief?

[brianthainess]

So just where will they 'borrow' the money from ? 

[chiang mai]

12 minutes ago, brianthainess said:

So just where will they 'borrow' the money from ? 

"The 2025 borrowing strategy includes 1.25 trillion baht (US$38 billion) in sovereign bonds, 140 billion baht (US$4 billion) through bond switching, 520 billion baht (US$16 billion) in Treasury bills, and 120 billion baht (US$3.6 billion) in savings bonds. The rest may be covered by promissory notes and term loans".

 

The Bond Market mostly. Thai bonds have been in demand internationally for many years, which is why some have said they should issue USD denominated bonds also.

 

 

[brianthainess]

Just now, chiang mai said:

"The 2025 borrowing strategy includes 1.25 trillion baht (US$38 billion) in sovereign bonds, 140 billion baht (US$4 billion) through bond switching, 520 billion baht (US$16 billion) in Treasury bills, and 120 billion baht (US$3.6 billion) in savings bonds. The rest may be covered by promissory notes and term loans".

 

The Bond Market mostly. Thai bonds have been in demand internationally for many years, which is why some have said they should issue USD denominated bonds also.

 

 

But IMO selling a bond is not borrowing it's selling something you will give back at a later date, with interest. But I do understand where you are coming from. 

[chiang mai]

6 minutes ago, brianthainess said:

But IMO selling a bond is not borrowing it's selling something you will give back at a later date, with interest. But I do understand where you are coming from. 

Same as Gilts or Treasuries, it monetises debt, as long as they time it right and watch the interest repayments load it will work out well. The IMF has been urging Thailand to increase its borrowings for years, which is why they have started to operate a small budget deficit which they then convert to bonds, I wish I could do that with my budget. 😞

[carlyai]

19 hours ago, chiang mai said:

No overseas or foreign borrowing/debt, all denominated in THB, smart.

I think if debt is more than 60%, that's not real smart.

How can they pay down this debt?

[sungod]

19 hours ago, Pouatchee said:

sure they are counting on the big farang global tax scheme to pay back the loan

 Thats just a drop in the ocean compared to what the rich Thais are hiding all over the world.

[Pouatchee]

7 minutes ago, sungod said:

 Thats just a drop in the ocean compared to what the rich Thais are hiding all over the world.

 

rich thai-chinese... same as taxs_it

[chiang mai]

11 minutes ago, carlyai said:

I think if debt is more than 60%, that's not real smart.

How can they pay down this debt?

60% of GDP is not big by international standards, neither is 70. 

[carlyai]

13 minutes ago, chiang mai said:

60% of GDP is not big by international standards, neither is 70. 

Yes but it should be paid back as you lose 60% of your money.

With no holes to did in the ground for minerals, where does the continuing money come from?

[phetphet]

How does this compare with the £22 billion black hole  that the Labour Party back in the UK are saying they have to deal with?

[chiang mai]

20 minutes ago, carlyai said:

Yes but it should be paid back as you lose 60% of your money.

With no holes to did in the ground for minerals, where does the continuing money come from?

Exports and tourism, thay are the two money earners. But 60% debt means only 5% interest per year, that's a great deal.

[Seppius]

23 minutes ago, phetphet said:

How does this compare with the £22 billion black hole  that the Labour Party back in the UK are saying they have to deal with?

 

UK debt is £2.7 Trillion, so taking a billion of pensioners is pocket change

[Rolo89]

27 minutes ago, chiang mai said:

Exports and tourism, thay are the two money earners. But 60% debt means only 5% interest per year, that's a great deal.

While tourism is back to pre pandemic the spend per person is way down. Doesn't look good for a country so reliant on it.

[billd766]

I am a bit confused.

 

Why would and country borrow money to repay debt?

 

Surely all you end up with is a bigger debt.

 

The way out of that debt trap is to borrow more money to repay THAT debt.

 

Now me, I would have thought that the best way out of debt is to cut back on spending, borrow NO money, and repay what you owe,

[NoDisplayName]

22 hours ago, snoop1130 said:

should not cause concern in the markets. She explained that approximately 1.1 trillion baht (US$33 billion) would be new borrowing primarily to cover the budget deficit, with the remainder designated for refinancing and restructuring existing debt.

 

Hub of maxing out the cash advance on your final available credit card to pay the late fees on your other maxed out delinquent credit cards!

[sammieuk1]

No worries about the Baht borrow any number you like and up it will go 🤔

[PETERTHEEATER]

22 hours ago, Pouatchee said:

sure they are counting on the big farang global tax scheme to pay back the loan

The amount of tax paid by farangs wont even service the interest payments. 😀

[connda]

So for everyone who has been freaking out recently about a "strong Thai Baht," given the signal to begin borrowing and increasing the size of the Thai budget (then add in the 1/2 Trillion THB vote-buying give-a-way) I can imagine that the THB is going to weaken significantly next year.  Of course, the game seems to be to see how fast countries can devalue their currency and get to the bottom of the fiat debasement basement first!

[Xonax]

Vote buying has become expensive these days.

 

 

[chiang mai]

UK news just released:

 

"Debt hits 100pc of national income for first time since 1960s".

 

The Pound fell as a result, as did UK stock markets, which just underscores the point about borrowing too much.