The revised medium-term fiscal framework should focus on strengthening revenue generation and rationalising government expenditure to reinforce fiscal credibility with ratings agencies, says the chief of the Fiscal Policy Office (FPO).
According to Vinit Visessuvanapoom, director-general of the FPO, government revenue generation must consider three main areas.
First, revenue collection depends on overall economic conditions and the efficiency of tax collection, particularly by major departments such as the Revenue Department.
Regardless of which government is in office, the Revenue Department must perform its duties to the fullest, he said.
Second, enhancing tax collection instruments, which may require legal amendments and is usually a lengthy process.
Third, restructuring of the national tax system, which is the most difficult task because it may require amending primary legislation that must be approved by parliament, as well as secondary legislation such as ministerial regulations on tax exemption provisions. These details are currently under review.
Mr Vinit said such reforms cannot be carried out in isolation, as it is necessary to consider the overall impact, such as who will be affected and how the government will provide compensation or support to those affected.
As the current government has a limited term in office, amendments to laws at the statutory (Act) level will only be planned, leaving implementation to the next administration, he said.
Regarding the government’s interest payments, Mr Vinit said this burden increased in recent years as the pandemic caused the government to borrow funds to support economic recovery, thereby raising public debt levels.
The interest payment-to-revenue ratio in fiscal 2024 was 9.59%.
However, Thailand’s strength lies in its relatively low interest rates compared with other countries, he said. The 10-year government bond yield is less than 2%, which is considered very low, said Mr Vinit.
Moreover, foreign currency-denominated government debt accounts for only 1% of total public debt.
According to the medium-term fiscal framework approved by the previous administration, which covers fiscal 2026-2029, the key objective is to reduce the fiscal deficit to an appropriate level over the medium term to restore fiscal strength and sustainability.
Fiscal deficit reduction has already begun, as in fiscal 2026 the government expects a fiscal deficit of 4.3% of GDP, followed by 3.6% in 2027, 3.3% in 2028, and 3.1% in 2029.
Meanwhile, the ratio of government revenue to GDP does not appear to have increased. According to estimates from the Finance Ministry, from 2027 to 2029 the government’s revenue-to-GDP ratio is expected to remain at 14.8-14.9%.
As for the level of public debt, it is projected to approach the upper limit set by the Finance Ministry of 70% of GDP. In fiscal 2025, the public debt-to-GDP ratio is estimated at 65.6%, rising to 69.3% by 2029.
A major source of fiscal pressure comes from expenditure categories that are difficult to reduce, such as welfare spending for citizens and civil servants, as well as debt repayment obligations.
In fiscal 2024, these categories accounted for up to 66% of total government expenditure, and this share is expected to continue rising as the country transitions to an aged society.