Public debt implications of borrowing for infrastructure plans acceptable: Virabongsa

Thailand's public debt level is not at a dangerous level, while further public borrowing for the government's Bt2-trillion infrastructure programme is acceptable as the investment is aimed at establishing national assets and not for consumption purposes, a senior official said yesterday.

Virabongsa Ramangkura, chairman of the Bank of Thailand's board and the Strategic Committee for Reconstruction and Future Development (SCRF), said public debt had remained at Bt4.875 trillion, or 43.47 per cent of gross domestic product, in November. The debt-to-GDP ratio is very low when taking into account the country's sound economic fundamentals, given the trade and current-account surpluses, the large level of foreign reserves and lack of budget-deficit problems, he said.

The government, therefore, has the capability to borrow for the Kingdom's Bt2-trillion infrastructure investment, he added. "I have been monitoring this issue closely. There is no concern about it.

The government borrowing is not similar to the previous borrowing of 20 years ago. It's borrowing for investment, not for consumption. If the public debt level rises to 70-80 per cent, when compared to the country's status and investment it is [still] very low. We need to look at the details of the public debt," Virabongsa said.

There are several elements of the nation's public debt, which need to be clearly spelled out to ensure the overall picture is accurately understood, he said, saying that it needed to be broken down into the government's debt, state enterprises' debt, external debt and domestic debt.

The public debt level should be compared with the country's financial status, including the trade balance, current-account balance and economic expansion, he said. If the borrowing is made for investment, a public debt level of 50, 60 or 70 per cent is not dangerous, he insisted.

Moreover, amid the current influx of US dollars into Thailand, the government may not need to engage in external borrowing to meet its infrastructure investment needs.

Instead, the government and state enterprises may now be able to borrow domestically due to the large supply of the baht in the country, he said. Virabongsa also said that related agencies were studying the establishment of a new organisation to manage the country's electric-train project.

Meanwhile, the SCRF meeting yesterday approved a Bt6-million budget for the Thailand Creative & Design Centre to study details of value creation for the electric-train project, and another Bt13 million for the National Economic and Social Development Board to study ways to eliminate industrial waste.