According to a Finance Ministry source who requested anonymity, the government faces challenges in managing its debt service budget, especially interest payments partially attributed to significant borrowing since the onset of the COVID pandemic, as well as heightened volatility in global interest rates and budgetary constraints.
As a result, over the past four fiscal years (2022-2025), the Public Debt Management Office (PDMO) disbursed additional funds from the treasury to cover interest payments amounting to B1.81 billion, B8.89bn, B39.7bn and B26.5bn, respectively, reports the Bangkok Post.
Although the annual interest burden remains manageable, receiving sufficient budget allocations, or establishing mechanisms to allocate additional funds for interest payments to absorb fluctuations in global interest rates, would help to strengthen long-term fiscal stability.
Another factor beyond the PDMO’s control that directly affects the government’s debt-servicing capacity and the country’s credit rating is the urgent need for the government to strengthen revenue collection. Improving revenue performance would help lower the annual interest payment-to-revenue ratio, bolstering the government’s ability to service its debt, and ultimately supporting an upgrade in the sovereign credit rating, the source said.
The government’s interest payment-to-revenue ratio has risen in recent years due to large-scale borrowing, particularly during the pandemic to cushion the economic impact. As a result, this ratio was 9.59% in fiscal 2024, rising to 10.2% in 2025.
Although this level remains manageable and is still within investment-grade criteria, the trend is rising, the source said.
Meanwhile, the government’s net revenue collection as a share of GDP has been declining over the past decade, from 16.1% in 2015 to 15% in 2025.
The public debt-to-GDP ratio also rose after the pandemic. As of October, the ratio was 65.2% of GDP. The government forecasts the ratio will rise to 68.2% in fiscal 2026 and 69.8% in fiscal 2028, nearing the government’s public debt ceiling of 70% of GDP.
Under the medium-term fiscal plan for 2027-2030, the government proposed raising the value-added tax rate to 8.5% in 2028 and to 10% in 2030, up from the current rate of 7%, to increase state revenue.