Why Thailand will be struggling with public debt management in 2013

Debt to GDP ratio has been between 36-46%.

According to DBS, public debt management will be a challenge down the line. Since 2005, public debt as a proportion of GDP hovered between 36% to 46%, with the figure standing at 44% in January. 

With the debt ceiling set at 60% of GDP, there are no immediate threats to the fiscal position. However, the upcoming THB 2trn infrastructure plan has to be managed.

Assuming that 50% of the amount will be borne by state coffers, this implies an additional THB 1trn in direct budgetary spending that has to be financed over the next eight years.

Here's more from DBS:

To put things into perspective, THB 1trn amounts to about 8.5% of 2012’s GDP. Of the remaining THB 1trn, private-public-partnership initiatives and state-owned enterprises will help to pick up the tab.

This implies that the government will still have indirect exposure to roughly 80% of the total infrastructure bill. In the short term, pressure on the fiscal accounts comes from ongoing progrowth policies.

While the first-car rebate scheme has ended, the rice-pledging scheme is still in place. By setting a high minimum price on rice, the government has wound up with about 17 mn tons of rice stockpile.

It is generally assumed that the government will eventually have to offload its rice stockpile at a significant loss. That said, the overall budget deficit is still relatively low compared to nominal GDP growth and we do not think that the fiscal position will be threatened in the short term.