Govt May Borrow 2.6T Baht in FY69, Bond Yields Seen Rising

Thansettakij•Economy•17d ago

Reader Briefing

Thailand's government is projected to increase its borrowing to 2.6 trillion baht in FY2026, with potential upward pressure on bond yields due to increased state debt and geopolitical risks.

•The Thai government's borrowing needs are estimated to increase to 2.6 trillion baht in the fiscal year 2026.
•This increase is largely driven by the issuance of a royal decree allowing an additional 400 billion baht in borrowing to manage energy crises.
•Bond yields for Thai government bonds, particularly 2- and 10-year maturities, are anticipated to rise due to increased borrowing and Middle East uncertainties.
•The government plans to diversify its funding sources beyond just issuing government bonds.

Overview

•Government borrowing needs in fiscal year 2026 are projected to reach 2.6 trillion baht.
•This projection follows the issuance of a royal decree enabling the Ministry of Finance to borrow an additional 400 billion baht to address energy crises.
•The increased borrowing is higher than the 2.4 trillion baht initially estimated, and surpasses levels seen during the COVID-19 pandemic.
•The government intends to utilize multiple financial instruments, including loans from financial institutions, treasury bills, and promissory notes, instead of relying solely on government bond issuance.
•The royal decree authorizing the additional borrowing became effective on May 9, 2026, with partial borrowing expected to commence in early June.
•Increased government borrowing and global uncertainties, particularly in the Middle East, are expected to push up Thai government bond yields.
•Bond yields for 2-year and 10-year Thai government bonds are forecast to approach 1.30% and 2.50%, respectively.
•This approach of diversifying funding sources mirrors strategies employed during 2063-2064 to manage the COVID-19 crisis, where the issuance of government bonds did not increase rapidly in the initial phase.

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Key Quotes

Kasikorn Research Center

"Kasikorn Research Center estimates that government borrowing needs in fiscal year 2026 are likely to increase to 2.6 trillion baht after the government issued a royal decree authorizing the Ministry of Finance to borrow an additional 400 billion baht."

ศูนย์วิจัยกสิกรไทยประเมินว่า ความต้องการกู้เงินของรัฐบาลในปีงบประมาณ 2026 มีแนวโน้มเพิ่มขึ้นแตะระดับ 2.6 ล้านล้านบาท หลังรัฐบาลออกพระราชกำหนด (พ.ร.ก.) ให้อำนาจกระทรวงการคลังกู้เงินเพิ่มเติมวงเงิน 4 แสนล้านบาท

Key Entities

Organization

Kasikorn Research Center(ศูนย์วิจัยกสิกรไทย)ℹ️

A research center that analyzes and projects economic trends, including government borrowing and bond yields in Thailand.

Ministry of Finance(กระทรวงการคลัง)ℹ️

The government body that will be authorized to borrow funds under the new royal decree.

Law

Royal Decree to Borrow 400 Billion Baht(พ.ร.ก. กู้เงิน 4 แสนล้านบาท)

A specific legal instrument authorizing the Thai government to borrow an additional 400 billion baht to address energy crises.

Timeline

Fiscal Year 2026(ปีงบ 69)

The fiscal year during which the government's projected borrowing is expected to occur.