Thailand presses ahead with 3.8 trillion baht budget despite debt nearing fiscal ceiling

The Thai government has unveiled a 3.788 trillion baht ($110 billion) budget for fiscal 2027, maintaining a 788 billion baht deficit as it prioritizes economic support over rapid fiscal consolidation while pledging to keep public debt within its self-imposed limits.

Presenting the budget bill to the House of Representatives on Monday, Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas said continued deficit spending remained necessary as Thailand confronts slowing growth and mounting external risks.

As Southeast Asia's second-largest economy, Thailand's public debt stood at 66.66 percent of GDP in April, approaching the government's fiscal discipline ceiling of 70 percent.

The proposed budget allocates 3.788 trillion baht in expenditure against 3 trillion baht in net revenue available for spending, leaving a financing gap of 788 billion baht. Gross government revenue for fiscal 2027 is projected at 3.1452 trillion baht, up 2.7 percent from the previous year.

Ekniti said Thailand's economy is forecast to expand by 1.7 to 2.7 percent in 2027, with a midpoint estimate of 2.2 percent, supported by a recovery in global trade and domestic consumption. Inflation is expected to remain contained at 0.5 to 1.5 percent.

But he warned that the outlook remained clouded by geopolitical tensions in the Middle East, uncertainty surrounding protectionist trade measures by major economies and the growing economic impact of climate change.

"Given these economic conditions, the government needs to maintain a deficit budget in fiscal year 2027 to preserve economic stability while supporting broad-based, high-quality economic growth," Ekniti noted.

While maintaining expansionary fiscal policy, the government said it remained committed to restoring healthier public finances over the medium term, targeting a fiscal deficit of below 3 percent of GDP by 2029.

The spending plan is built around what the finance ministry describes as the Five "T" Principles — Target, Transparent, Transition, Transformation and Together — intended to improve the efficiency and effectiveness of public expenditure.

Ekniti said the government would implement the budget under Thailand's fiscal discipline framework to ensure efficient use of public funds while supporting infrastructure investment, expanding economic opportunities and fostering more inclusive long-term growth.

Alongside the budget, the government plans to advance economic initiatives including Thailand FastPass, designed to speed up investment approvals and attract new capital, and SMEs Plus, a program intended to expand income opportunities for small and medium-sized enterprises.