Thailand no longer has a fiscal buffer to contain rising public debt, making it necessary to accelerate reforms for both the economy and the public sector to lift economic growth closer to its full potential, according to the Finance Ministry.A ministry source who requested anonymity said its Fiscal Risk Report, prepared following the completion of fiscal 2025 to assess the government's medium-term fiscal risks in terms of debt sustainability, underscored the need for comprehensive structural reforms to both the economy and the public sector, alongside a serious commitment to fiscal consolidation.
According to the debt sustainability analysis for fiscal 2024-2026, the positive structural contribution from economic growth has declined significantly. As a result, the government's fiscal space for net borrowing (after deducting principal repayments) without increasing the public debt-to-GDP ratio has narrowed to only 1.5% of GDP.
Although domestic borrowing conditions remain stable, the continued accumulation of outstanding debt at elevated levels has increased the structural burden of interest payments to around 1.5% of GDP. As a consequence, Thailand has effectively exhausted the structural buffer that previously helped contain public debt levels, said the source.
