Understanding emergency debt decrees

The manoeuvre helps governments address issues that require urgent funding

PUBLISHED : 9 May 2026 at 05:14

NEWSPAPER SECTION: Business

WRITER: Wichit Chantanusornsiri

- Small

- Medium

- Large

Anutin Charnvirakul is the sixth Thai prime minister to issue an emergency decree authorising the Finance Ministry to borrow funds, this time in an effort to address the impact of the energy crisis and support the country's energy transition.

According to Finance Minister Ekniti Nitithanprapas, the emergency loan decree authorising up to 400 billion baht in borrowing to address the economic fallout from global crises, approved on May 5 by the cabinet, will be submitted to parliament on May 14.

The loan package is divided into two equal components. The first 200 billion baht funds immediate relief measures for vulnerable households and businesses affected by the crisis.

The remaining 200 billion baht supports Thailand's transition towards renewable and clean energy, including investment in alternative energy technologies, improvements in energy efficiency, and initiatives aimed at reducing dependence on imported oil and natural gas.

Mr Ekniti said the government opted to issue an emergency decree rather than rely on the budgetary process due to limited available funds and the urgency of the situation.

Only around 50 billion baht remains available within the current fiscal framework, alongside a modest central contingency reserve of roughly 20 billion baht, which must be preserved for emergencies.

The next fiscal year's budget would not be available until October, rendering it ineffective as a timely policy tool.

All borrowing under the decree will be conducted domestically, he noted, citing strong liquidity in Thailand's banking system estimated at more than 1 trillion baht and relatively low interest rates.

This approach avoids foreign exchange risk and helps ensure financing costs remain manageable, said Mr Ekniti.

When combined with special borrowing laws enacted by previous prime ministers, the total authorised borrowing under these laws has exceeded 4 trillion baht. The primary objectives were to ease the public's economic hardship and enhance the country's development.

Why is special borrowing legislation issued in a crisis?

Special borrowing legislation is typically issued in the form of an emergency decree, as authorised under Section 172 of the Constitution. The main reasons usually cited are the current fiscal year's expenditure budget is insufficient to address an existing crisis, or the government cannot wait for the following year's budget allocation due to urgent necessity.

Section 172 of the 2017 Constitution states to maintain national security, public safety, economic stability, or prevent public disasters, His Majesty the King may issue an emergency decree with the force of law. This decree may only be issued when the cabinet determines an urgent and unavoidable emergency exists.

The decree takes effect upon publication in the Royal Gazette, after which the government promptly submits the decree to parliament for approval. If parliament does not approve the decree, any actions already taken under it shall remain valid.

Under the Public Debt Management Act, the Finance Ministry is the sole authority empowered to borrow or provide guarantees on behalf of the government, subject to cabinet approval. Other state agencies may not borrow or provide guarantees unless specifically authorised by law.

The act stipulates any borrowing by the ministry must fall under one of five objectives prescribed by the law:

To finance budget deficits or situations where government expenditure exceeds revenue, and to manage treasury liquidity;

To support economic and social development;

To restructure public debt;

To provide lending to other state agencies; and

To develop the domestic bond market.

In cases where the government borrows to compensate for a budget deficit arising from expenditures exceeding revenues, borrowing in baht is permitted up to 20% of that fiscal year's expenditure budget, plus an additional 80% of the budget allocated for principal debt repayments.

The act also authorises the Finance Ministry to borrow funds for economic and social development purposes when expenditures beyond the annual budget are necessary and require financing in foreign currencies, or when borrowing is needed to strengthen the country's financial stability. In such cases, the ministry may borrow in foreign currencies up to 10% of the annual expenditure budget. However, if domestic market conditions are favourable and beneficial to the development of the country's fiscal and financial systems, borrowing may also be conducted in baht.

Since the 1997 Asian financial crisis, how many emergency borrowing decrees have been issued and why?

Since 1997, Thailand has issued eight emergency borrowing decrees amounting to around 4.23 trillion baht.

During the Chuan Leekpai administration in 1998, the government issued a decree authorising the Finance Ministry to borrow up to 300 billion baht in Thai currency to strengthen the stability of the financial institution system following the crisis.

Another 1998 decree authorised the borrowing and management of loans to support the Financial Institutions Development Fund (FIDF), compensating for losses incurred by the fund as a result of rescuing financial institutions during the crisis. The borrowing ceiling was set at 500 billion baht.

In 2001, the Thaksin Shinawatra administration issued an decree authorising the Finance Ministry to borrow and manage loans to support a second phase of FIDF assistance, with borrowing limited to 780 billion baht, as the fund's losses had not yet been resolved.

The Abhisit Vejjajiva government issued a decree in 2009 authorising borrowing of up to 400 billion baht for economic recovery and stability during the global financial crisis. The crisis affected overseas institutions and triggered a global economic meltdown, severely hampering the Thai economy and making urgent economic stimulus necessary.

In 2012, the Yingluck Shinawatra administration issued a decree authorising borrowing of up to 350 billion baht in either local or foreign currency to build water management systems and for national development following the devastating 2011 floods. However, only a portion of the loan was disbursed due to problems related to procurement procedures and environmental issues.

The Prayut Chan-o-cha administration issued a decree in 2020 authorising borrowing of up to 1 trillion baht in local or foreign currencies to mitigate the economic and social impacts of the pandemic and rehabilitate the economy. The funds were intended to combat the outbreak and provide relief and compensation to affected individuals, farmers and business operators.

In 2021, the Prayut government issued another emergency decree authorising an additional 500 billion baht in borrowing to address the economic and social impacts caused by the pandemic.

The decree this month authorises borrowing to address the impact of the energy crisis and support the country's energy transition.

What are the economic and public debt implications of the borrowing plan?

Mr Ekniti said if the government takes no action, meaning it does not borrow funds to provide relief to the public and invest in the transition towards clean energy, Thailand's GDP could decline as household income contracts while domestic costs rise, leading to a slowdown in economic activity.

A lower GDP would also result in a higher public debt ratio relative to GDP.

Without government stimulus measures, he said GDP growth is estimated at 1.6% this year and 2.4% next, which is below the country's economic potential.

The government estimates every additional 200 billion baht injected into the economy would increase GDP growth by roughly 0.4 percentage points.

Fiscal stimulus can also help avoid stagflation and prevent long-term economic scarring that could permanently damage businesses and the labour force, making future recovery more difficult, said Mr Ekniti.

In addition, government spending injections are expected to create a crowding-in effect, according to the Finance Ministry. When the government borrows to invest in new infrastructure, it lifts confidence and encourages further investment by the private sector.

Following the additional borrowing of 400 billion baht, Thailand's public debt level in fiscal 2026 is projected to reach 68% of GDP, below the government's ceiling of 70%.

The ratio is expected to peak at 69% in 2027 before gradually declining to 66% by 2031.

Subscribe to our newsletters for daily updates, breaking news and exclusive content.

- KEYWORDS

- Thailand emergency loan decree

- Thai government borrowing

- Ekniti nitithanprapas

- Public debt management act

- Thailand fiscal policy

- Economic relief measures

- Renewable energy investment