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The rising interest expenses have progressively depleted the treasury reserves over the past four years, prompting the government to urgently seek ways to boost revenue before its credit rating is negatively impacted.
An anonymous Finance Ministry official indicated that managing the debt service budget, especially interest payments, has become increasingly challenging due to substantial borrowing initiated during the COVID-19 pandemic, as well as heightened volatility in global interest rates and fiscal limitations.
From 2022 to 2025, the Public Debt Management Office (PDMO) allocated additional funds from the treasury to cover interest expenses, disbursing 1.81 billion baht, 8.89 billion, 39.7 billion, and 26.5 billion baht respectively.
While the annual interest burden remains within manageable limits and is adequately funded, establishing mechanisms to allocate extra resources or budget buffers to accommodate fluctuations in global interest rates would enhance long-term fiscal stability.
Beyond the PDMO’s control, a critical factor influencing the government’s debt servicing capability and credit rating is the need to strengthen revenue collection. Improving revenue performance would reduce the interest payment-to-revenue ratio, bolstering the government’s debt management capacity and supporting potential upgrades to the sovereign credit rating.
The interest payment-to-revenue ratio has increased in recent years, primarily due to large-scale borrowing during the pandemic to mitigate economic impacts. It reached 9.59% in fiscal 2024 and rose to 10.2% in 2025. Although this remains within investment-grade standards and is considered manageable, the upward trend is a concern.
Moreover, the government’s net revenue as a percentage of GDP has been declining over the last decade, from 16.1% in 2015 to 15% in 2025. Concurrently, the country’s public debt-to-GDP ratio has risen from the pandemic low, reaching 65.2% as of October. The government projects this will increase to 68.2% in fiscal 2026 and 69.8% in fiscal 2028, nearing the statutory debt ceiling of 70%.
Under the medium-term fiscal plan for 2027-2030, the government proposes raising the value-added tax (VAT) rate from the current 7% to 8.5% in 2028 and then to 10% in 2030 to increase government revenue.