The existing fiscal regulations have loopholes that might allow the government to create excessive debts, say Thailand Development Research Institute's economists.
Pakorn Vichyanon, a senior economist, said the state has no ceiling on its guarantee on debt for listed state-owned enterprises, especially basic utilities such as power, water and telecommunications, though unlisted state-owned enterprises have a restricted guarantee of 10% of the annual budget.
The government is restricted by law to keep borrowing under 20% of its annual budget, but it occasionally enacts executive decrees for off-budget borrowing that can exceed the legal cap. Examples include the 400-billion-baht Thai Khem Kaeng bill in 2009; the Bank of Thailand's 300-billion-baht in soft loans for flood rehabilitation in 2012 and 350 billion in water management borrowing in the same year.
The state is also restricted from borrowing over 80% of the annual loan principle repayment budget, as well as 13% of estimated annual revenue. Another law bars the government from having external debt exceeding 10% of the annual expenditure budget or 9% of the country's income from exports of goods and services.
Although the government has declared it will maintain public debt at 50-60% of GDP, the restriction does not have any legal effect. The country is at high risk of plunging into a vicious debt cycle, as in many European countries that are finding it difficult to finance their budget deficits because of shaken confidence in their fiscal positions, said Mr Pakorn.
"Popular populist measures such as tax rebates for first-car and home buyers, the 30-baht healthcare scheme, free bus rides and the rice pledging policy have tremendously increased the fiscal cost and pressure," wrote Mr Pakorn.
He called on the government to stick to a fiscally sustainable framework, noting that Indonesia adheres to the Maastrict standard in curbing its consolidated fiscal cash deficit to 3% of GDP yearly, including off-budget spending and local governments' budgets.
Though European countries comply with the Maastrict rules, they and Japan have implemented several measures to bolster people's income and welfare that have increased the public debt and spurred demand for continued or increased benefits.
Somchai Jitsuchon, a senior economist, expected Thai public debt to exceed 60% of GDP over the next four years, unless the economy grows more than 6% and there is no reduction in the spending budget.
"If the economy grows slower, expanding less than 4-5%, public debt could soar as the country's tax system is highly sensitive to economic growth," said Mr Somchai.
He said the implementation of the 2-trillion-baht infrastructure budget and measures to raise human resource capacity could help the economy achieve the growth target, but he cautioned that investment must be done efficiently with minimal leakages.
Mr Somchai urged the government to reduce rice pledging subsidies to 70 billion baht from 200 billion per year, allowing an additional 5% of GDP spending.