Thai cabinet approves new borrowing as public debt nears 70% ceiling

Overview

Updated 1 hour ago

Thailand's cabinet approved 1.26 trillion baht ($37.5 billion) in new borrowing for the fiscal year starting October 1. The plan puts public debt on track to hit 69.7% of gross domestic product, less than a point under the legal ceiling of 70%.

To keep costs down, the finance ministry will issue short-term paper first, including treasury bills, term loans and promissory notes, then refinance into longer bonds once global yields ease. That holds the average interest cost near 2.6%, but it depends on markets staying calm while the debt load keeps climbing.

Why it matters

Thailand's public debt is one point below its legal ceiling, and the government's plan hinges on bond yields falling soon.

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Key Indicators

1.26 trillion baht ($37.5B)

New borrowing approved for fiscal 2027

Cabinet-approved borrowing for the fiscal year starting October 2026.

69.7%

Projected public debt-to-GDP, end of fiscal 2027

Less than a point below the legal ceiling of 70%.

68%

Public debt-to-GDP, end of fiscal 2026

Record high, per the Public Debt Management Office.

2.6%

Average government borrowing cost

Expected to hold steady in fiscal 2027 despite global volatility.

Voices

Curated perspectives — historical figures and your fellow readers.

Ever wondered what historical figures would say about today's headlines?

People Involved

Jindarat Viriyataveekul

Director-General, Public Debt Management Office

Overseeing fiscal 2027 borrowing strategy

Ekniti Nitithanprapas

Finance Minister of Thailand

Presented the fiscal 2027 debt management plan to cabinet

Organizations Involved

Public Debt Management Office

Government debt agency

Managing the fiscal 2027 borrowing plan

Issues Thailand's sovereign bonds and manages public debt under the Ministry of Finance.

Ministry of Finance

Government ministry

Oversees fiscal policy and public debt

Sets Thailand's fiscal policy, manages the national budget, and issues government debt.

Cabinet of Thailand

Executive government body

Approved the fiscal 2027 public debt management plan

Thailand's executive decision-making body.

Timeline

2 events Latest: Yesterday

September 2026
Cabinet approves fiscal 2027 debt plan
Latest Policy Decision

Thai cabinet approved 1.26 trillion baht in new borrowing. Public debt projected at 69.7% of GDP, near the 70% ceiling.
Yesterday
Debt office shifts to short-term borrowing
Announcement

PDMO chief Jindarat Viriyataveekul said the government will favor treasury bills, term loans and promissory notes while long-term bond yields stay elevated.
Yesterday

Scenarios

Thailand hits the 70% debt ceiling

Possible Resolves by Q3 2027

Discussed by: Ministry of Finance Medium-Term Fiscal Framework projections, which place peak debt at 69.78% of GDP in fiscal 2028

If growth undershoots the 2.5% forecast or an emergency forces extra spending, public debt could cross the 70% limit. The government would face mandatory spending cuts or tax increases under its fiscal framework.

Bond yields ease, Thailand refinances into long-term debt

Possible Resolves by Q1 2027

Discussed by: Jindarat Viriyataveekul and the PDMO, who outlined the two-step refinancing plan

If global yields retreat, the PDMO converts short-term borrowings into longer-dated bonds at lower rates, locking in the current 2.6% average cost and reducing rollover risk.

Short-term borrowing costs spike, refinancing risk materializes

Possible Resolves by Q3 2027

Discussed by: Market commentary on rising US Treasury yields, with the 10-year note near 5% for the first time in over two decades

If yields keep climbing, rolling over short-term paper gets more expensive. The average borrowing cost rises above 2.6%, squeezing the budget and raising pressure on Thailand's credit rating.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

July 1997

Thailand's 1997 Asian Financial Crisis

Thailand spent its foreign reserves defending the baht's peg to the US dollar. In July 1997 it let the currency float; the baht lost more than half its value and the region slid into crisis.

Then

Thailand accepted a $17.2 billion International Monetary Fund rescue package with austerity, banking reform and privatization conditions.

Now

The crisis cost Thailand years of growth and forced the country to rebuild fiscal buffers. It shaped the strict fiscal rules used today, including spending and debt limits.

Why this matters now

Thailand rebuilt its fiscal position after 1997 and is now approaching its 70% debt ceiling again, testing the discipline that crisis produced.

2010-2015

Greece's sovereign debt crisis (2010)

Markets lost confidence in Greece's ability to service its debt as the global financial crisis laid bare years of deficits. Bond yields spiked, forcing Greece to seek international rescue.

Then

Three bailout programs totaling more than 280 billion euros came with strict austerity conditions and public asset sales.

Now

Greek debt stayed chronically high, above 160% of GDP, and the economy contracted by roughly a quarter over the decade.

Why this matters now

Shows how quickly borrowing costs can rise when a government loses market confidence, a risk Thailand's short-term borrowing strategy carries if yields spike before refinancing.