Bangkok Post
Interest decline eases state payment burden
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The government's interest payment burden relative to government revenue, even after borrowing 400 billion baht, is unlikely to exceed the level acceptable to credit rating agencies, according to the Finance Ministry.
Key facts
- The government's interest payment burden relative to government revenue, even after borrowing 400 billion baht, is unlikely to exceed the level acceptable to credit rating agencies, according to the Finance Ministry.
- A ministry source who requested anonymity said the downward trend in interest rates is expected to ease pressure on the government's interest payment burden relative to state revenue.
- Rating agencies have set a guideline that this ratio should not exceed 12% of the government's annual revenue to prevent government borrowing from creating an excessive burden through interest payments.
- If a larger share of state revenue must be used to service interest obligations, the government has less revenue available for investment and may need to increase borrowing to finance higher fiscal deficits.
- The Thai Overnight Repurchase Rate after adding the spread is around 1.1-1.2%, noted the source.
Summary
A ministry source who requested anonymity said the downward trend in interest rates is expected to ease pressure on the government's interest payment burden relative to state revenue.
Rating agencies have set a guideline that this ratio should not exceed 12% of the government's annual revenue to prevent government borrowing from creating an excessive burden through interest payments.