Moody's is likely to maintain Thailand's sovereign credit rating after two other rating agencies -- Standard & Poor's (S&P) and Fitch Ratings -- maintained the rating with a stable outlook, according to the Public Debt Management Office (PDMO).
Jindarat Viriyataveekul, public debt advisor at the PDMO, said Moody's is set to review Thailand's sovereign credit rating early next year.
Currently, Moody's assigns a credit rating of BBB+ to Thai government bonds, which is equivalent to the ratings given by S&P and Fitch.
Key factors that rating agencies focus on include the government's fiscal policies, political stability, and the government's investment policies as previously announced by the government including ongoing development projects such as investments in the Eastern Economic Corridor and new projects.
As of October 2024, Thailand's public debt-to-GDP ratio stood at 63.99%, with the ratio projected to rise to 65.6% in the 2025 fiscal year. However, Mrs Jindarat noted that under the International Monetary Fund's definition of public debt, which excludes state enterprise debt but includes local administrative organisations' debt, Thailand's public debt-to-GDP ratio would be around 58%.
She said rating agencies would like to see the Thai government reduce its fiscal deficit now that the economy has moved beyond the Covid-19 pandemic to lower the public debt-to-GDP ratio. Following the pandemic, other countries have experienced stronger economic recoveries compared to Thailand, leading to a reduction in their public debt-to-GDP ratios or fiscal deficits.
She also mentioned the government's interest payment burden relative to its net revenue, which currently stands at 9% of net government revenue. This figure determines the cost of issuing government bonds. At 9%, Thailand's bonds are rated A-. If the ratio rises to 10-11%, the rating would drop to BBB, and if it exceeds 12%, it will fall into the junk bond or non-investment grade category. If the government continues to run higher deficits or faces an economic crisis that necessitates borrowing to stabilise the economy, this ratio could increase further.
Currently, the average maturity of government debt, or the average time to maturity (ATM), is nine years, and 80% of the total debt is at a fixed interest rate. A lower ATM indicates a higher risk for the government in terms of debt restructuring.
According to Mrs Jindarat, the current public debt management framework has four key targets: the public debt-to-GDP ratio must not exceed 70% of GDP; the government's debt burden as a percentage of projected annual revenue must not exceed 35%; the proportion of public debt in foreign currency to total public debt must not exceed 10%; and the ratio of public debt in foreign currency to export revenue from goods and services must not exceed 5%.
In 2025, the public debt-to-GDP ratio is projected to be 66.8% compared to 63.9% in 2024, while the government's debt burden to projected annual revenue is estimated at 34.8%, compared to 30.3% in 2024.
The proportion of public debt in foreign currency to total public debt is projected to be 0.88% in 2025 compared to 1.09% in 2024, with the ratio of public debt in foreign currency to export revenue from goods and services expected to remain at 0.05% next year, unchanged from 2024.
