(Source: Wichit Chantanusornsiri Bangkok Post, Thailand (MCT) — Fiscal debt levels are expected to remain within manageable limits over the next five years, according to the Public Debt Management Office (PDMO).
Public debt is projected to rise from 48.7% of gross domestic product this year to 50.7% in 2013 and 52.6% in 2014.
Debt will reach a level of 53.9% of GDP by 2016, still under the 60% ceiling set by the Finance Ministry.
Debt obligations as a share of the annual budget meanwhile are projected at 9.3% this year and dropping to 7.6% next year. Debt service obligations are projected to jump in 2014 to 11.6% of total budget expenditures, a level expected to be maintained through 2016. Under the law, debt service obligations must be no more than 15% of total budget expenditures, a restriction that effectively caps the amount of new debt the government can borrow each year.
The new debt framework, covering 2012 to 2016, will be submitted to the cabinet for review next month.
The framework is based on the assumption that the government borrows all 350 billion baht authorised earlier this year for flood prevention and water management projects. Under the emergency decree authorising the loans, borrowing must be completed by June 2013.
The debt framework also is line with calls by Finance Minister Kittiratt Na-Ranong to consolidate Thailand’s fiscal position. The fiscal 2013 budget calls for a deficit of 300 billion baht, down from a deficit of 400 billion under the current budget.
If authorities are unable to continue the trend towards lower budget deficits, it could result in public debt levels rising beyond the estimates in the PDMO framework.
Another key factor in the debt projections deals with liabilities of the Financial Institutions Development Fund. Management of the bailout debt from the 1997 crisis was transferred to the Bank of Thailand earlier this year.
Repayment of the 1.14 trillion baht in debt will be made over the next few decades using funds raised from a surcharge of 0.47% on deposits assessed against local banks.
©2012 the Bangkok Post (Bangkok, Thailand)
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