The recent cabinet approval to approve an additional loan of 214 billion baht to offset the budget deficit is intended as a line of credit in case government expenditure exceeds revenue, the Public Debt Management Office (PDMO) said. .
The amount of borrowing should be considered along with the level of cash reserves, expenditure and income, said Patricia Mongkhonvanit, chief executive of PDMO.
The level of borrowing would be assessed by the government in case revenue collection falls below the 9% target or around 300 billion baht, Ms Patricia said.
“It’s not the first time the government has had to borrow money in case spending exceeds revenue,” she said. “We did this during the Asian financial crisis.”
If the government borrows the full amount of the loan, it will increase the public debt-to-GDP ratio to 52.4% in 2020 from 45.8% currently, according to the PDMO.
For fiscal 2021, the public debt-to-GDP ratio is expected to reach 57.8%, based on Thailand’s GDP growth.
The PDMO has contracted a sum of 338 billion baht under the 1 trillion baht emergency loan decree.
The government will issue an additional 50 billion baht in savings bonds for sale to the public starting next week to help finance the budget deficit, Ms Patricia said.
The bonds will be offered in two tranches: 5 billion baht in four-year bonds with a coupon of 1.7% and 45 billion in seven-year bonds with a coupon of 2.22%.
The proceeds will be used to fund the budget deficit, rather than the outbreak response, Ms Patricia said.
The first tranche of savings bonds will be sold through the Pao Tang app, through which investors can make purchases via PromptPay transfer from each financial institution, with the investment sum capped at 5 million baht per nobody. Sales will begin on August 25 and run until September 11.
For the second tranche, sales will be distributed among four commercial banks divided into two periods. The first period runs from August 26 to September 3 and the second period from September 4 to September 11.
The investment sum is capped at 10 million baht per person with no purchase limitation per bank for the first period. No advance purchase limit is applied to the second period.
The offer follows the sale of 50 billion baht of government savings bonds in May to help mitigate the fallout from the coronavirus outbreak as part of a 1 trillion baht borrowing plan .
