BANGKOK: Thailand’s public finances are under growing strain as the country faces the twin pressures of chronic fiscal deficits and sluggish economic growth, raising concerns about a potential downgrade in its sovereign credit rating.
Amonthep Chawla, Executive Vice President at CIMB Thai Bank, said the risk is real, noting that Moody’s has already revised Thailand’s outlook from “stable” to “negative”. He added that other agencies, such as Fitch and S&P, could follow suit in the near future.
High public debt remains a critical factor, much of it carried over from previous administrations. With the government’s latest budget already passed, fiscal pressures are expected to continue mounting.
“The key challenge is how to generate additional revenue while containing spending,” Amonthep said, warning that the fiscal deficit will otherwise deepen and add to the country’s public debt burden.
He called for more targeted spending, particularly measures aimed directly at low-income households, similar to the “Let’s Go Halves” co-payment scheme, which used limited funds but had a strong multiplier effect in the economy.
However, he emphasised that the main driver of any downgrade is not fiscal weakness but Thailand’s long-standing low-growth trap. The economy has been expanding at only 2–3% annually, far below potential and well behind regional peers.
This prolonged subpar growth is abnormal. Thailand used to perform much better, but now its growth potential itself is being revised down, Amonthep noted.
He urged the government to pursue structural reforms that lift long-term growth, not just short-term handouts.
“If Thailand remains stuck at around 2% growth, the risk is not just a negative outlook but an actual downgrade in ratings. Compared with our neighbours, Thailand is looking weaker.”
Thailand faces rising risks of a sovereign credit downgrade as the economy struggles with slow growth, mounting public debt and structural weaknesses, according to Burin Adulwattana, Managing Director and Chief Economist at Kasikorn Research Centre.
He noted that if GDP growth remains weak while public debt continues to climb, the debt-to-GDP ratio will increase rapidly. Thailand’s economy has been recovering slowly, and low growth is accelerating the pace of debt accumulation.
A key concern is fiscal discipline. Thailand has run persistent budget deficits of 4–10% of GDP annually in recent years, pushing debt levels higher and closer to the legal ceiling.
“The crucial question is how each government will manage fiscal discipline to prevent chronic deficits,” Burin said.
Populist spending adds to the risks. Cash handouts and welfare schemes alone will not lift economic growth, and if such programmes continue to expand while the tax base shrinks due to an ageing population, rating agencies may consider downgrades.
Burin warned that Thailand could face challenges similar to France, where ballooning welfare costs strain public finances.
Structural vulnerabilities are another concern. Heavy reliance on specific sectors such as tourism, automotive manufacturing and exports leaves Thailand exposed to external shocks. A downturn in any of these could slash national revenue and tax collection. - The Nation/ANN
