Finance Minister Pichai Chunhavajira has signaled that a new emergency decree enabling borrowing remains a viable option in response to Thailand’s ongoing economic challenges, underscoring that the door is not closed on extraordinary measures should the macroeconomic environment deteriorate further. This stance comes amid a historical pattern of extraordinary borrowing used to shield the economy from shocks, and as the government weighs how to respond to a global slowdown amplified by tariff policies. The minister’s comments emphasize that any large-scale stimulus must be designed to generate substantial momentum within the Thai economy, and that such an initiative would require significant funding, with a proposed starting point at no less than 500 billion baht. In addition, he stressed that the emphasis should fall squarely on domestic drivers of growth—raising household consumption, boosting investment, and expanding access to soft loan facilities to support sectors most affected by the downturn. These considerations are unfolding in a context where the government is evaluating several funding approaches in collaboration with key national institutions, notably the National Economic and Social Development Council (NESDC) and the Bank of Thailand.
Legal framework for government borrowing
Thailand’s approach to government borrowing rests on a layered set of laws and constitutional provisions that govern how and when public funds can be mobilized beyond ordinary annual budgets. At the core is the Public Debt Management Act of 2005, which delineates the permissible purposes for which the Finance Ministry may borrow and defines the structural limits that constrain those borrowing activities. The act authorizes borrowing for several essential functions: first, to compensate for budget deficits when government expenditure outpaces revenue; second, to finance economic and social development; third, to restructure public debt; fourth, to re-lend funds to other government agencies; and fifth, to develop and deepen the domestic bond market. Each of these purposes serves a distinct policy objective, whether stabilizing finances in a deficit year, funding long-term development projects, or ensuring liquidity and market depth through bond market growth.
Within the act, there are explicit numerical ceilings and conditionalities that shape how borrowing can be used in practice. For budget deficit compensation, a traditional and persistent government practice over the past two decades, the borrowing limit is capped at 20% of the total annual expenditure budget. This ceiling also accommodates any additional spending incurred within the fiscal year. Moreover, borrowing for debt principal repayment is constrained to no more than 80% of the earmarked debt servicing portion of the annual budget. These constraints are designed to prevent the aggregate level of borrowing from becoming untethered from the government’s ability to service debt reliably, ensuring that policy levers remain within sustainable bounds even in crisis periods.
When it comes to supporting economic and social development, the law allows foreign-currency borrowing in circumstances where expenditure needs exceed the annual budget and where such needs justify international liquidity. In this scenario, the funds must be denominated in foreign currency, and the Finance Ministry is empowered to borrow up to 10% of the annual expenditure budget in foreign currency. The foreign-currency dimension of this provision recognizes the reality that certain development programs require international funding and, in some cases, must be financed with instruments denominated in currencies other than the Thai baht.
Beyond the Public Debt Management Act’s prescribed framework, borrowing must also conform to the broader fiscal discipline standards enshrined in the 2018 State Financial and Fiscal Discipline Act. Section 53 of that Act is particularly salient: it requires that any government borrowing that goes beyond what the Public Debt Management Act authorizes must be undertaken through a special law and only in cases of urgent and necessary action to address national crises where it is not possible to allocate the annual expenditure budget in time. The special laws invoked under this provision must spell out, in detail, the borrowing’s purpose, the period of the borrowing, the specific programs or projects to be financed, the authorized borrowing amount, and the government agencies responsible for implementing those programs or projects. This requirement serves as a robust procedural safeguard to ensure that emergency actions are tightly circumscribed and transparent, even in times of crisis.
Furthermore, any emergency decree that contemplates borrowing beyond the scope of the Public Debt Management Act must be aligned with Section 172 of the Thai constitution. This constitutional provision grants the King, upon cabinet determination that emergency circumstances require urgent and unavoidable action, the authority to enact an emergency decree with the same legal force as the Act. The practical consequence is that such decrees are not discretionary in a normal sense; they are exceptional measures triggered only when an emergency is deemed to threaten national security, public safety, economic stability, or the capacity to prevent public disasters. The cabinet must formally determine that an emergency exists and that the decree is necessary for immediate action. This constitutional check is intended to ensure that extraordinary borrowing powers are reserved for crisis management rather than used as a standard policy tool.
In addition to these legal prerequisites, the process by which a borrowing decree is implemented depends on timely and coordinated action across different branches of government. The cabinet’s assessment of what constitutes an emergency must be grounded in credible economic indicators, contemporaneous assessments of risk, and the anticipated impact on the fiscal outlook. The interplay between statutory limits, constitutional authority, and executive decision-making is central to how emergency borrowing can be mobilized without eroding fiscal credibility or compromising debt sustainability in the medium to long term.
The legal architecture thus creates a framework in which emergency borrowing can be contemplated, but only under carefully curated conditions. It requires alignment with statutory limits, adherence to fiscal discipline principles, and a constitutional basis for extraordinary actions. The framework is designed to balance the need for swift and decisive policy responses with the imperative to maintain budgetary credibility and long-run fiscal stability. This balance is central to any debate about issuing a new emergency borrowing decree, as policymakers must weigh the urgency of crisis response against the risks to debt dynamics and macroeconomic stability.
Procedural and governance considerations
In practice, the decision to pursue an emergency decree involves extensive interagency consultation and risk assessment. The government would be expected to articulate the precise objective of the borrowing, the sectors and programs that would receive funding, and the expected impact on macroeconomic variables such as growth, inflation, and employment. The decree would need to specify the borrowing term, the maximum amount, and the responsible implementing agencies. In addition, the government would need to demonstrate how the borrowed funds would translate into tangible economic benefits, including the expansion of productive capacity, support for households and businesses, and improvements in essential services or infrastructure that underpin long-run growth. The governance architecture would also require transparent reporting and accountability mechanisms to monitor the use of borrowed resources and to assess outcomes against predefined targets.
As a matter of principle, any emergency borrowing should be accompanied by a credible plan for debt management and risk mitigation. Given the evolving global interest-rate environment and the potential for currency fluctuations, the Finance Ministry would likely need to present hedging strategies, currency-basket considerations, and stress tests to illustrate resilience under adverse scenarios. The alignment of an emergency decree with sound debt-management practices is not only a legal necessity but also a strategic imperative for maintaining market confidence and safeguarding the country’s sovereign credit profile. The overarching objective remains to respond promptly to crises while preserving fiscal integrity and ensuring that borrowing supports durable economic gains rather than merely addressing immediate liquidity needs.
Past emergency borrowing decrees: a historical overview
Thailand has a substantial history of deploying emergency borrowing decrees to address periods of acute financial stress and systemic shocks. The pattern of past decrees reveals not only the scale of the interventions but also the political and economic contexts in which they were enacted, as well as the long-run implications for public debt and fiscal sustainability. Understanding these precedents provides important insights into how a future decree might be structured, what lessons have been learned, and how the government has navigated the tension between urgent crisis response and disciplined public finances.
In 1998, during the early stages of the Asian financial crisis, two emergency borrowing decrees were issued under Prime Minister Chuan Leekpai’s administration. The first decree authorized the Finance Ministry to borrow up to 300 billion baht with the objective of stabilizing financial institutions beleaguered by high levels of non-performing loans. The central aim of this provision was to recapitalize and stabilise the banking sector, thereby enabling these financial institutions to resume normal lending operations and to restore confidence in the financial system. This was a period characterized by severe liquidity constraints, a fragile banking sector, and a loss of confidence that threatened the broader economy. The second decree, issued in the same year, allowed borrowing up to 500 billion baht to support the Financial Institutions Development Fund (FIDF). This fund was designed to address the financial crisis by providing targeted support to restructure and stabilize financial institutions and restore stability to public confidence in the financial system as a whole.
The decrees of 1998 reflect a strategy of using emergency borrowing to directly address financial sector fragility and systemic risk, recognizing that restoring the functioning of credit markets was essential to the broader recovery. They also signaled a willingness to mobilize substantial resources through extraordinary measures to prevent broader macroeconomic collapse. These actions occurred in a period of extreme stress, when the risk of prolonged recession or a deeper financial crisis threatened to undermine economic and social stability across the country.
Moving forward to the aftermath of natural disasters, Thailand’s experience under Prime Minister Yingluck Shinawatra included a major domestic flood event in 2011 that spurred a subsequent response to fund flood-control and water-management initiatives. A decree issued in 2012 authorized borrowing up to 350 billion baht for the purpose of supporting water management systems and broader national development. The intent of this decree was to equip the country with resilience against flood risks and to enable investments in infrastructure and disaster-preparedness that would yield long-term developmental benefits. However, the political environment at the time proved unstable and obstructed the government’s ability to access the loan, highlighting how political risk can shape the execution and effectiveness of emergency borrowing measures, regardless of their technical design or fiscal intent.
The most significant use of an emergency borrowing decree in recent years occurred during the administration of Prime Minister Prayut Chan-o-cha in response to the Covid-19 pandemic. This crisis prompted a sweeping policy response designed to mitigate the severe economic and social disruption caused by nationwide lockdowns and the shuttering of many sectors. The emergency decree issued in 2020 authorised borrowing by the Finance Ministry up to 1 trillion baht to address the immediate crisis and support the recovery of the economy and society during the Covid-19 outbreak. That initial tranche was subsequently expanded, and in 2021, an additional 500 billion baht borrowed under the same emergency framework brought the total to 1.5 trillion baht. The scale of this borrowing reflected the unprecedented nature of the pandemic’s impact, spanning multiple quarters of economic contraction and widespread income losses.
These episodes of emergency borrowing, particularly the 2020-2021 Covid-19 response, coincided with a broader shift toward expanding the public debt ceiling in order to maintain policy flexibility in a period of rising needs and constrained revenues. The government subsequently announced an increase in the public debt ceiling from 60% to 70% of GDP to accommodate higher levels of government debt without triggering immediate fiscal alarms. This shift in debt ceilings, paired with the emergency and routine borrowing, contributed to a marked rise in the national debt-to-GDP ratio. Beginning in the pre-crisis period, public debt stood at 41.1% of GDP in September 2019, rising to 49.4% in the following year, and reaching 64.2% by February 2025. These figures illustrate the long-run debt accumulation that accompanied extraordinary financial interventions, and they underscore the ongoing challenge of balancing crisis response with the goal of debt sustainability.
The outcomes of these emergency borrowing episodes are mixed and reflect a range of factors, including the effectiveness of the funded programs, the efficiency of implementation, macroeconomic conditions, and the political environment. On one hand, emergency borrowing provided the government with immediate liquidity, enabling it to inject stimulus into the economy, stabilize financial markets, and fund critical infrastructure and disaster-response projects. On the other hand, the cumulative effect of repeated emergency borrowing, especially when combined with routine deficit-financing, contributed to higher public debt and a widened debt-to-GDP ratio, raising questions about long-run fiscal sustainability and the costs of servicing debt under volatile global financial conditions. The experience thus reinforces the importance of transparent planning, credible fiscal rules, and the need to ensure that emergency measures are matched by reforms and growth-oriented investments that bolster revenue generation and the economy’s productive capacity.
The pandemic-era borrowing and the debt ceiling
Among the emergency measures, the Covid-19 response stands out for its size and its implications for the debt framework. The 1 trillion-baht borrowing envelope initially approved in 2020 was intended to cushion the shock from the pandemic and to support both short-term stabilization and longer-term recovery. The subsequent addition of 500 billion baht in 2021 expanded this response, underscoring the persistent volatility and lingering effects of the public health crisis on livelihoods and business activity. The interplay between emergency funds and ongoing budgetary processes contributed to a higher public debt path. In response to this evolving debt load, the government increased the public debt ceiling to 70% of GDP from a prior level of 60%, a move designed to preserve financial flexibility while acknowledging the longer-term consequences of elevated borrowing. The debt-to-GDP ratio rose from 41.1% of GDP in September 2019 to 49.4% the next year, and by February 2025 stood at 64.2%, signaling a continued drift of debt at elevated levels relative to the size of the economy.
These changes in debt levels have important implications for fiscal policy and debt management. They place increased emphasis on the sustainability framework and on the ability of the government to service debt in the face of potential future shocks, including shifts in global interest rates or renewed external risks. The higher debt ceiling provides policy space to respond to crises but also imposes a higher burden in terms of debt service. It is thus critical to monitor, measure, and manage debt dynamics through robust debt management practices, credible macro-fiscal planning, and durable growth strategies that help ensure that debt levels do not outpace the growth potential of the economy.
Fiscal stability indicators and the debt outlook
A central question in the debate around future emergency borrowing is how such actions would affect the country’s fiscal stability and the integrity of its budget process. The Finance Ministry has established a framework of five key indicators designed to gauge fiscal stability and to provide a structured lens through which to assess the sustainability of public debt. This framework serves as a normative guide for policymakers, rating agencies, and investors alike, outlining thresholds that must be respected to maintain market confidence and to keep borrowing costs within reasonable bounds. The indicators are as follows:
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Public debt must not exceed 70% of GDP. As of September 2024, the level stood at 63.3%, leaving some headroom before the statutory ceiling would be breached. This metric provides a clear longitudinal target and a benchmark against which future borrowing can be judged. Maintaining debt below the ceiling is interpreted as a signal of fiscal prudence and macroeconomic resilience, even in the face of crisis episodes that necessitate temporary increases in borrowing.
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The burden of public debt relative to government revenue within a fiscal year must not exceed 35%. By September 2024, the ratio was 35.1%, slightly above the threshold, indicating a tight margin between the size of debt obligations and the fiscal resources generated within the year. This indicator captures the ability of the government’s annual revenue to service debt without resorting to additional borrowing or compromising other essential expenditures. It also serves as a proxy for the sustainability of debt service costs within the context of the annual budget cycle.
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Public debt denominated in foreign currency must not exceed 10% of total public debt. As of September 2024, foreign-currency-denominated debt represented 1.05% of total public debt, well within the limit. This metric is relevant for currency risk management, especially given global currency volatility and the status of Thailand’s external sector. A small share of foreign-denominated debt helps reduce exposure to currency mismatch and buffering against exchange rate shocks, contributing to overall financial stability.
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Public debt in foreign currency relative to the country’s export earnings from goods and services must not exceed 5%. As of September 2024, that ratio stood at 0.05%, a reflection of the minimal exposure to foreign currency debt in relation to export earnings. This indicator further underscores the prudent balance between currency risk and export capacity, highlighting resilience in the external sector and the security of debt service against external shocks.
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The budget allocation for principal debt repayment must be between 2.5% and 4% of the annual expenditure budget. As of September 2024, the share was 3.28%, which lies within the prescribed band. This metric demonstrates the policy emphasis on maintaining a steady and predictable path for debt repayment whilst ensuring that the budget remains capable of supporting ongoing operations and investments. It also reflects the preference for debt servicing to be part of the ongoing fiscal planning rather than treated as an afterthought.
Implications of these indicators for a potential new decree
If the government were to issue another emergency decree to expand borrowing, the five-indicator framework would be a critical reference point for assessing whether the action would be consistent with the broader objective of maintaining fiscal stability. While an urgent crisis may necessitate temporary violations of the usual budgetary constraints, the framework emphasizes that any sustained expansion of debt must be compatible with the 70% ceiling, the revenue-cover ratio, and prudent debt-management practices. A new decree would likely require careful calibration so that the immediate benefits of crisis response do not lead to a deterioration in the country’s risk profile or the credibility of its fiscal management.
From the standpoint of debt sustainability, the trajectory of debt-to-GDP remains a pivotal consideration. The government’s objective is not merely to minimize the debt ratio, but to pursue growth-enhancing borrowing that can expand the economy’s productive capacity and thereby gradually reduce the debt burden relative to GDP over time. This perspective aligns with the broader macroeconomic goal of using debt-financed stimulus to bolster demand, spur investment, and improve the supply side of the economy in ways that yield a higher potential output and stronger revenue generation in the medium to long term. Such a strategy would require a credible plan for growth and a clear articulation of how the borrowed funds translate into higher incomes and greater tax receipts, thereby enabling the debt ratio to move downward as the economy expands.
In evaluating fiscal stability, one must also consider the broader external environment and domestic fiscal conditions. The government’s revenue collection has faced headwinds during periods of slower growth, while debt service costs are influenced by global interest-rate dynamics and currency movements. The medium-term fiscal plan and the Public Debt Management Office’s analyses emphasize the need to prepare for fluctuations in global rates, which can affect the cost and sustainability of debt service. The past experience—with interest payments rising against a backdrop of volatile rates—has underscored the importance of prudent financial planning, diversification of debt instruments, and the use of risk-mitigation tools to manage potential exposure. These considerations are central to any policy decision about additional emergency borrowing, as policymakers must balance the immediate needs of crisis response with the long-run imperative of preserving fiscal credibility and macroeconomic stability.
Economic context, stimulus considerations, and the case for action
The impetus for contemplating an additional emergency decree stems from a mix of domestic economic vulnerabilities and an increasingly uncertain external environment. Global growth has been slowing, and the Thai economy faces headwinds that are likely to be intensified by a broader slowdown linked to tariff policies associated with U.S. policy actions under President Donald Trump and global trade tensions. In such a scenario, traditional policy instruments may be insufficient to sustain momentum across key sectors, particularly those that drive consumption and investment at home. The minister’s remarks suggest that, should a stimulus be deemed necessary, it would be substantial in scale—enough to generate meaningful and durable economic momentum, with a recommended minimum funding level of 500 billion baht. The emphasis on domestic focuses—boosting consumption, ramping up investment, and offering soft loan facilities—reflects a strategy aimed at stimulating demand and supporting the productive sectors that can contribute to growth without disproportionately widening the current account deficit or triggering inflationary pressures.
The Ministry and related agencies are actively exploring a range of funding options for a potential decree. The discussions involve not only the Finance Ministry but also the NESDC and the Bank of Thailand, indicating a comprehensive, cross-institutional approach to crisis management and macroeconomic stabilization. The inclusion of NESDC signals the importance of aligning any stimulus with the country’s development priorities and sectoral strategies, ensuring that the borrowing supports projects with high developmental and growth multipliers. The Bank of Thailand’s involvement underscores the role of monetary policy considerations in tandem with fiscal levers, including how debt-financed stimulus could interact with interest-rate expectations, liquidity conditions, and financial stability. The ultimate objective is to design a policy response that is credible, targeted, and capable of producing durable benefits for households and businesses.
The question of how such a decree would be funded is central to the policy debate, given the potential implications for debt dynamics and the cost of borrowing. The government is actively weighing several options, with ongoing discussions aimed at identifying the most effective arrangement for mobilizing the necessary resources. The emphasis on domestic channels and domestic growth-oriented programs suggests a preference for using policies that stimulate local demand and investment rather than relying on external financing or protectionist measures that could complicate Thailand’s trade relationships. Moreover, the focus on soft loans indicates a strategy to reduce the friction costs of credit for households and small businesses, particularly in a climate of elevated uncertainty and subdued private sector confidence.
The role of stimulus scale and composition
A stimulus package of 500 billion baht would represent a substantial bottom-up push to the economy, especially if targeted toward sectors with high multipliers and spillover effects. In the context of a prolonged period of subdued growth, such a program could have multiple channels of influence: increasing consumer spending through direct transfers or targeted subsidies, stimulating investment through credit facilities and guaranteed loan programs, and leveraging infrastructure and development projects that improve long-run productivity. The policy design would likely emphasize measures that raise household disposable incomes and expand investment opportunities, thereby supporting a virtuous cycle of demand and supply that could help lift growth above the recent pace.
The proposed soft-loan framework would be an important instrument in this mix, providing favorable financing conditions to firms and households that face credit constraints or higher borrowing costs during an economic downturn. Soft loans can help spur investment by reducing the cost of capital and encouraging firms to undertake productive projects that might otherwise be postponed in a climate of uncertainty. The implementation details—such as eligibility criteria, loan terms, repayment schedules, and collateral requirements—would need to be carefully crafted to maximize effectiveness while mitigating risk to the fiscal position. The policy would also need to integrate safeguards against misallocation and ensure that funds are directed to projects with verifiable economic and social benefits, including job creation and productivity improvements.
The practical question of delivery
An emergency decree to authorize borrowing is not a mere fiscal instrument; it is a governance tool that must be administered with robust oversight and transparent accountability. The delivery of the funding, once authorized, would require precise implementation plans, clear programmatic objectives, and quantifiable performance metrics. It would also require a monitoring and evaluation framework to track progress, outcomes, and fiscal impacts over time. In addition, the government would need a communications strategy to explain the rationale for the borrowing, the intended beneficiaries, and the anticipated macroeconomic effects. This approach would help maintain public trust and investor confidence, which are essential components of successful crisis response and debt management.
It is important to note that even as the government contemplates more expansive borrowing powers, it remains necessary to maintain a disciplined, rules-based framework that supports credible budgeting and fiscal responsibility. The balance between urgent crisis response and long-term sustainability is delicate and requires careful calibration. The capacity to enact an emergency decree does not absolve policymakers from the obligation to pursue efficient, growth-oriented spending and to monitor the macroeconomic environment for signs of overheating or risk to financial stability. The ongoing dialogue among the Finance Ministry, NESDC, and the Bank of Thailand signals a comprehensive approach intended to preserve this balance while equipping Thailand with the tools needed to address significant economic challenges.
Debt management and medium-term fiscal challenges
Thailand’s debt dynamics are increasingly shaped by a combination of domestic growth trends, external financing conditions, and the evolving policy landscape surrounding public borrowing. The five-indicator framework provides a structured lens through which policymakers and market participants can evaluate the resilience and sustainability of the fiscal stance. Yet beyond the indicators lies a broader narrative about growth, revenue mobilization, and the capacity to service debt in a context of fluctuating global interest rates and domestic revenue volatility. The medium-term fiscal plan, which covers the years 2026–2029, highlights that the Public Debt Management Office (PDMO) foresees ongoing challenges in managing the debt-servicing budget, particularly in relation to interest payments. This assessment reflects the reality that, even with prudent debt levels, the cost of servicing debt can become a dominant budget item when global rates rise or when foreign-denominated assets or liabilities are present in the debt stock.
Over the past three fiscal years (2022–2024), the government allocated additional funds for interest payments beyond the original budgeted amounts, totaling 50.4 billion baht. While this figure remains within manageable limits, it underscores the volatility inherent in debt servicing costs and the need for contingency planning to ensure the government can meet its obligations without compromising essential services or program funding. The PDMO has established an internal benchmark for the ratio of government interest payments to estimated government revenue, setting a ceiling that is designed to provide a margin of safety given the uncertainties in revenue collection and debt dynamics. The current policy objective aims to keep this ratio under 10%, a threshold that aligns with credit-rating agency practices and market expectations. The latest figures show that the ratio stood at 8.29% at the end of fiscal 2022 and rose to 9.59% more recently, with the agency subsequently raising the ceiling to 12%.
These developments illustrate the tension between maintaining debt sustainability and preserving the government’s capacity to respond to crises with flexible fiscal tools. While the debt-to-GDP ratio remains a primary barometer of fiscal health, the cost structure of debt service matters just as much in shaping the government’s long-run budgetary flexibility. The fact that the debt stock has grown substantially due in part to emergency borrowing and the broader deficit financing framework raises questions about the sustainability of the current trajectory, even as the economy experiences periods of growth. The PDMO’s role in monitoring the debt-servicing burden and adapting financial management strategies is therefore crucial to maintaining fiscal credibility and ensuring that the borrowing capacity remains available for future policy responses.
Current debt metrics and the trajectory to stabilization
As a context for the present and prospective borrowing decisions, the public debt stock, relative to GDP, has moved upward over the past years, reflecting the cumulative impact of borrowing activity. The ratio has climbed from near 41% of GDP in 2019 to nearly two-thirds of GDP by 2025, signaling a substantial expansion of the government’s liabilities relative to the size of the economy. This trajectory highlights the importance of ongoing reforms and supportive growth to prevent debt from exceeding the 70% ceiling and to create room for maneuver in case of future shocks. It also reinforces the need for reliable revenue growth, expenditures restraint, and prudent debt composition—factors that influence the cost and risk of debt service.
The government’s medium-term plan and debt-management strategy emphasize the need for responsive policy tools that can be deployed in crisis periods without compromising long-run stability. The emphasis on improving the quality of public investment and ensuring that debt-financed programs yield high social and economic returns is central to those efforts. Additionally, there is recognition that interest-rate volatility and external financing costs are among the principal risks that could undermine debt sustainability, underscoring the value of diversification of funding sources and the use of hedging instruments when appropriate. The long-run objective remains to reconcile the urgency of crisis response with the discipline of fiscal policy, ensuring that the government’s debt obligations remain manageable while supporting a resilient, growth-oriented economy.
How a new emergency decree would work in practice
If policymakers decide to pursue a new emergency decree to authorize borrowing, several critical procedural and substantive steps would shape its design and implementation. First, the decree would have to be grounded in an explicit assessment of the emergency conditions and the policy objectives it intends to achieve. The text would need to clearly specify the purpose of the borrowing, the period over which it would be authorized, the specific programs or projects to be funded, and the maximum borrowing amount. It would also assign responsibility for implementing those programs to designated government agencies, ensuring accountability and clarity of execution.
Second, the decree would have to align with the constitutional and statutory framework described earlier, including the requirement to fall within the Public Debt Management Act unless a special law is enacted under Section 53, and the need for cabinet approval and, if necessary, parliamentary oversight or post-facto reporting. The legal structure requires careful coordination and justification, particularly for borrowing beyond the Act’s authorizations, which would necessitate a special law detailing the borrowings’ purpose, period, programs, amount, and implementers. The text would thus be constructed to withstand scrutiny from budget officials, auditors, and rating agencies, reflecting best practices in fiscal governance and crisis management.
Third, to attract confidence in the policy, the government would likely present a macroeconomic rationale, including projected impact on growth, employment, inflation, and debt dynamics. A robust macroeconomic model would be necessary to illustrate how the funds would stimulate demand, foster investment, and ultimately contribute to a higher potential growth rate that could reduce the debt-to-GDP ratio over time. The design would also incorporate risk-mitigation strategies, such as hedging arrangements, debt diversification, and mechanisms to safeguard against adverse currency or interest-rate movements. The overall objective would be to deliver a targeted, efficient, and credible policy response that minimizes unnecessary distortions and maximizes the probability of achieving sustainable, scalable growth.
Fourth, the governance and oversight framework would determine how the emergency funds are allocated, monitored, and evaluated. Transparent procurement processes, strict project selection criteria, and performance indicators would be essential to ensure that the borrowed resources are used efficiently and yield measurable benefits. A reporting regime, including regular updates on the status of funded programs, would help maintain public trust and investor confidence. The governance design would also articulate contingency plans in case anticipated outcomes fail to materialize, enabling adjustments to program design or funding allocations as needed.
Fifth, the implementation dynamics would need to address pacing and sequencing. The decree could specify staged disbursement mechanisms to prevent bottlenecks and to align funding with project milestones and budgetary cycles. This would help smooth the fiscal impact over time and improve the predictability of debt service costs. The pacing strategy would be tailored to the nature of the funded programs—whether they are infrastructure investments with long gestation periods or short-term stabilization measures intended to cushion household incomes and support immediate consumption. In either case, achieving alignment with the broader macroeconomic objectives would be critical to the decree’s effectiveness and legitimacy.
Sixth, the long-run fiscal impact would be a central consideration. Policymakers would be expected to present a credible plan for debt management, including scenarios for different growth paths and interest-rate trajectories. The plan would also need to demonstrate how the additional borrowing would contribute to higher revenue and economic growth, thereby supporting a trajectory toward debt stabilization or gradual reduction of the debt ratio. The assessment would consider potential downside risks, including weaker-than-expected growth, inflationary pressures, or external shocks, and would outline a range of policy responses designed to safeguard fiscal sustainability.
In sum, the practical execution of a new emergency borrowing decree would require meticulous design, rigorous justification, and disciplined governance. It would demand a credible argument for why extraordinary borrowing is warranted, how it would be employed to maximize public value, and how it would be managed to preserve fiscal credibility and financial stability. The experience of previous emergency decrees provides a practical template—highlighting both the opportunities and limitations of such measures—and underscores the importance of aligning any prospective decree with established legal principles, prudent debt management, and a clear strategy for fostering sustained economic growth.
Public debt implications and the broader growth context
If the government proceeds with another emergency decree, the likely consequence would be an elevation of the public debt stock relative to GDP, given that borrowing expands the liabilities on the state’s balance sheet. The immediate objective of such a measure would be to stimulate the economy and mitigate the effects of a downturn, particularly by channeling funds into investment and consumption-driven activities. However, this approach also raises concerns about debt sustainability and the long-run capacity of the government to service debt, especially in a setting of muted growth and potential shocks to the financial markets.
The government has argued that the public debt ceiling of 70% of GDP is sufficient to maintain the credibility of the fiscal position, a credibility that exerts an important influence on borrowing costs in financial markets. The logic is that if debt remains within the ceiling and the macroeconomic framework demonstrates resilience and growth potential, markets will price Thai sovereign debt with a manageable risk premium. Yet credibility is not static; it hinges on the trajectory of debt, the stability of revenues, and the government’s ability to deliver value from the borrowed resources. In this sense, the policy stance emphasizes both debt containment and growth-enhancing borrowing—an approach intended to ensure that any increase in debt results from investments that eventually raise the economy’s capacity to generate revenue and repay obligations.
From a broader macroeconomic perspective, a growth-enhancing borrowing strategy aims to offset the negative demand effects of a downturn by raising productive capacity and stimulating private investment. When investments yield returns that raise GDP growth, the debt-to-GDP ratio can decline even in the presence of higher nominal debt when the denominator grows faster than the numerator. This outcome requires careful targeting of the funded projects and a commitment to high-quality public investment that improves longer-term productivity. Conversely, if the borrowing is not efficiently allocated, or if growth remains subdued, the increased debt burden could weigh on the fiscal space and constrain policy flexibility in the future. Consequently, the effectiveness of any new emergency borrowing hinges on project selection, implementation efficiency, governance quality, and alignment with a credible growth strategy.
It is also important to consider how the debt profile—comprising a mix of domestic and foreign-currency-denominated instruments, as well as the term structure of debt—affects vulnerability to shocks. The Finance Ministry’s framework emphasizes that foreign-currency debt remains a relatively small share of total debt, signaling a degree of resilience to currency fluctuations. The trend toward prudent currency composition is intended to mitigate currency risk while enabling the government to access international capital markets when necessary. The balance among debt maturities, the diversification of funding instruments, and the management of rollover risk all contribute to the stability of the debt service profile, which in turn influences the borrowing costs faced by the government and the sustainability of the fiscal stance.
Looking ahead, the debt management office’s monitoring and forecasting will continue to play a central role in informing policy decisions about whether to pursue further emergency borrowing. The PDMO’s internal benchmark for the ratio of interest payments to estimated revenue, currently set toward a ceiling of 12%, provides a critical stress test for the budget. If interest rates rise or revenue growth slows, this ratio can become an important constraint on the government’s capacity to finance additional borrowing without compromising other essential expenditures or policy initiatives. By maintaining an eye on these metrics and incorporating sensitivity analyses into fiscal planning, the government can better assess the risk-return trade-offs of an emergency borrowing decree and calibrate its policy response to evolving conditions.
The governance, process, and foresight questions ahead
As Thailand contemplates the possibility of an emergency decree to authorize borrowing, a central question concerns not only whether such a measure is warranted, but also how it would be designed to withstand scrutiny and deliver tangible benefits. The experience of past decrees underscores the importance of ensuring that extraordinary borrowing is paired with transparent processes, credible program designs, and robust monitoring to maximize the odds of successful implementation. A key component of this approach is to align the decree with the five stability indicators, to demonstrate a clear, credible pathway toward debt sustainability, and to articulate the expected macroeconomic effects with specificity.
The broader economic outlook remains uncertain, with potential headwinds stemming from global trade tensions, currency movements, and shifts in global interest rates. In this environment, having a flexible but disciplined policy framework is essential. Emergency borrowing, while potentially necessary, should not become a routine substitute for structural reforms, productive investment, and sustainable revenue enhancement. The combination of crisis-responsive tools and growth-oriented investments will be critical to maintaining macroeconomic stability and to anchoring a resilient, expanding economy over the medium and long term.
The institutional coordination imperative
A successful emergency borrowing strategy requires high-quality coordination among ministries, agencies, and institutions. It calls for precise delineation of responsibilities, clear accountability lines, and a shared commitment to evidence-based policy design. The NESDC’s involvement ensures alignment with development policy priorities and sectoral strategies, while the Bank of Thailand contributes insights into monetary-stability considerations and financial system resilience. This triad—finance, development planning, and monetary policy—must work in concert to deliver a coherent and credible policy package. In addition, independent oversight bodies and parliamentary channels may play a role in ensuring transparency and accountability, reinforcing the legitimacy of the policy response in the eyes of citizens and investors alike.
The communication and accountability dimension
Effective communication around any emergency decree is essential to governance legitimacy. Clear explanations of the rationale, expected outcomes, and the mechanisms for monitoring and evaluation help build public trust and reassure markets. A well-articulated accountability framework that includes regular reporting on project implementation, cost overruns, and social or economic impacts can help maintain confidence in the use of public resources. Moreover, communication should emphasize that the measures are designed to be temporary, targeted, and performance-based, with sunset clauses or built-in review points to assess efficacy and adjust course if necessary.
The political economy and public confidence considerations
The political economy surrounding emergency borrowing matters as much as the technical design. Policymakers must consider how the public perceives debt accumulation, the potential distributional effects of borrowing, and the implications for long-term fiscal sustainability. Ensuring broad-based support for crisis responses and engaging with stakeholders across the economy can help build a consensus around necessary but potentially controversial measures. It is critical to demonstrate that borrowing decisions are guided by sound economic logic, that the expected benefits justify the associated risks, and that the government remains committed to prudent fiscal stewardship over time.
Conclusion
Thailand confronts a pivotal policy choice: whether to deploy another emergency borrowing decree to address ongoing economic challenges, or to pursue alternative instruments that balance urgent stabilization needs with long-run fiscal health. The legal framework provides a robust backbone for such actions, outlining the conditions under which extraordinary borrowing can occur, the requirements for special laws when beyond the ordinary act, and the constitutional guardrails that ensure emergency measures remain exceptional and purpose-driven. Historical experience shows that emergency borrowing can deliver swift liquidity and targeted investment, but it also carries the risk of elevating debt levels and constraining future policy flexibility if not carefully managed and anchored to growth-enhancing projects.
The government’s current stance—emphasizing substantial stimulus, domestic-focused spending, and soft-loan channels—reflects a strategic approach to translating borrowing into tangible improvements in consumption, investment, and overall economic momentum. The collaboration with NESDC and the Bank of Thailand signals a comprehensive assessment of macroeconomic needs, policy options, and risk management strategies. The five indicators framework remains a critical benchmark for assessing fiscal stability, helping to ensure that any expansion of borrowing preserves credibility and maintains sustainable debt servicing pathways. In this context, future decision-making will hinge on a careful balance between the urgency of crisis response and the discipline required to sustain long-term fiscal health.
The broader outlook will continue to hinge on how effectively the government can translate borrowed resources into durable growth, how resilient the economy proves to be to external shocks, and how successfully it manages debt-service costs amid a volatile global interest-rate environment. While the public debt ceiling provides policy space, the ultimate test will be whether the ensuing growth lifts the economy’s productive potential and enhances revenue generation, enabling debt to stabilize or gradually decline as prosperity expands. As Thailand weighs its options, the emphasis will be on a credible, growth-driven, and fiscally sustainable path that can withstand future uncertainties and preserve the nation’s financial stability for years to come.
