BANGKOK : Thailand's fiscal position remains strong and it can raise its public debt ceiling if necessary, the country's finance minister said on Wednesday, as the Southeast Asian nation deals with its worst COVID-19 outbreak to date.
The country's outbreak and stricter containment measures have hit economic https://www.reuters.com/article/idUSL4N2PL05N activity while tourism is still struggling.
Despite significant borrowing to fund the outbreak response, the country's ratio of debt to gross domestic product (GDP) was still low compared to peers at 56per cent, and expected to remain below its 60per cent ceiling at the end of this fiscal year to September, Arkhom Termpittayapaisith told a business conference.
"If there is a need to increase our debt ceiling, the fiscal policy committee... can revisit and raise this threshold," he said.
The government will work hard to stimulate the economy, especially by gradually reopening the country, to keep its GDP growth target of 4-5per cent next year, he said.
For 2021, the ministry forecast GDP growth of 1.3per cent, while the central bank predicts 0.7per cent. Last year, the economy contracted 6.1per cent, the deepest fall in over two decades.
The government has introduced various stimulus and relief measures since the pandemic with a total of 1.5 trillion baht (US$45.86 billion) borrowing, of which, 500 billion baht was approved this year.
The government has room available to engage in more "stimulus firepower" if necessary with much lower costs, Bank of Thailand Governor Sethaput Suthiwartnarueput told the conference. He recently recommended that the government borrow https://www.reuters.com/article/idUSL1N2PN0EP a further 1 trillion baht.
The economy has been quite resilient to shocks with limited downside risks and is likely to be much more resilient to a possible 'taper tantrum' than in many other countries due to its strong external position and banking sector, he said, referring to the impact of the withdrawal of U.S. stimulus.
The BOT will ensure financial conditions https://www.reuters.com/article/idUSL1N2PR0LJ are not a constraint on the economic recovery, he added, as the BOT's policy rate https://www.reuters.com/article/idUSL4N2PA3QW has been unchanged at a record low of 0.50per cent since a cut in May 2020.
(US$1 = 32.71 baht)
(Reporting by Orathai Sriring and Satawasin Staporncharnchai; Editing by Ed Davies)