PDMO considers interest rate for next issue of govt bonds
August 06, 2014 01:00 By Suphannee Pootpisut
Aug 15 meet set on country's debt ceiling
The Public Debt Management Office is determining the value of government savings bonds expected to issued in October.
Suwit Rojanavanich, an adviser to the PDMO, said the office expected to be able to issue the bonds in October, which falls in fiscal year 2015. The bond issuance is to compensate for the expected budget deficit of around Bt250 billion for fiscal 2015.
In mid-July the PDMO launched government savings bonds worth Bt30 billion. Those with maturity of seven years carried an interest rate of 4.25 per cent per annum and those with maturity of 10 years paid 4.75 per cent. The bonds were fully subscribed and this encouraged the military’s ruling National Council for Peace and Order to ask the office to issue a new lot of bonds.
Suwit said the PDMO was still considering the interest rate for the planned bonds.
In a related matter, he said Finance Ministry permanent secretary Rungson Sriworasat would chair a meeting on August 15 to discuss a preliminary plan to set the country’s debt ceiling at between Bt1.3 trillion and Bt1.4 trillion, of which Bt500 billion would be new debt. The total ceiling is not different from the 2014 fiscal year.
He added that of total new debt, Bt250 billion would be borrowings to offset the budget deficit, while some of the rest would be to finance the state infrastructure mega-project.
The debt plan for fiscal 2015 also includes borrowings to pay down some of the Bt500 billion in loans for the discontinued rice-pledging scheme. If this principal is not reduced, the PDMO will have to refinance the debt, which would mean a heavy interest burden for the state. The interest burden of this project is Bt20 billion per year based on an average interest rate of 4 per cent.