Fuel Crisis Threatens Thailand's Fiscal Targets and Debt Limits
Thailand's ongoing energy crisis is significantly challenging the government's medium-term fiscal plan for 2027-2030, according to the Finance Ministry. The crisis threatens key economic targets, including keeping the fiscal deficit below 3% of GDP and public debt under 70%. To stabilize domestic retail oil prices, the ministry may need to guarantee 150 billion baht in loans for the Oil Fuel Fund, which could increase public debt by approximately one percentage point of GDP. Consequently, this year's GDP growth is expected to fall short of the 2% target projected by the National Economic and Social Development Council. The deficit for fiscal year 2026 is now projected at around 4%, complicating efforts to reduce it in subsequent years. Additionally, economic volatility may hinder planned value-added tax increases from 7% to 10% by 2030. With government revenue-to-GDP ratios declining steadily over the past two decades, broader factors such as geopolitical tensions and climate change are further straining Thailand's fiscal position, potentially forcing a revision of the current financial framework.
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Fuel Crisis Threatens Thailand's Fiscal Targets and Debt Limits
Thailand's ongoing energy crisis is significantly challenging the government's medium-term fiscal plan for 2027-2030, according to the Finance Ministry. The crisis threatens key economic targets, including keeping the fiscal deficit below 3% of GDP and public debt under 70%. To stabilize domestic retail oil prices, the ministry may need to guarantee 150 billion baht in loans for the Oil Fuel Fund, which could increase public debt by approximately one percentage point of GDP. Consequently, this year's GDP growth is expected to fall short of the 2% target projected by the National Economic and Social Development Council. The deficit for fiscal year 2026 is now projected at around 4%, complicating efforts to reduce it in subsequent years. Additionally, economic volatility may hinder planned value-added tax increases from 7% to 10% by 2030. With government revenue-to-GDP ratios declining steadily over the past two decades, broader factors such as geopolitical tensions and climate change are further straining Thailand's fiscal position, potentially forcing a revision of the current financial framework.
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