Assessing Thailand’s Debt Ceiling—Room for Recalibration?

Selected Issues Papers, May 9, 2025

Source details

The pandemic responses and subsequent fiscal stimulus measures have eroded Thailand’s fiscal space, pushing its public debt close to the ceiling of 70 percent of GDP.
While this situation generally calls for fiscal prudence to reduce debt levels, it also raises questions about the adequacy of the current debt ceiling.
The paper uses various approaches to assess Thailand’s public debt threshold, beyond which debt could become unsustainable or negatively impact growth.
Stochastic simulations are used to account for potential impact of macroeconomic and fiscal shocks in calibrating an appropriate debt ceiling for Thailand.

Uses various approaches to assess public debt threshold for Thailand.
Employs stochastic simulations to incorporate potential macroeconomic and fiscal shocks.

The proximity of public debt to the ceiling of 70 percent of GDP suggests a need for fiscal prudence to reduce debt levels.
The assessment questions the adequacy of the current debt ceiling and provides an analytic basis for potential recalibration based on estimated thresholds and shock scenarios.

Subject: Asset and liability management, COVID-19, Debt limits, Fiscal policy, Fiscal rules, Fiscal stance, Health, Public debt
Keywords: COVID-19, Debt ceiling, Debt limits, Eastern Europe, estimates of debt limits, fan chart, fiscal rules, Fiscal stance, Global, public debt debt ceiling, summary of debt limit, Thailand's debt ceiling