State Firms Told to Avoid Borrowing when Investing
•February 16, 2026
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Why It Matters
The rule curtails additional pressure on Thailand's public debt, safeguarding fiscal sustainability while reshaping how SOEs finance growth projects.
Key Takeaways
- •SOEs must prioritize internal cash before borrowing
- •Borrowing by SOEs counts as public debt
- •Public debt at 66.1% GDP, near 70% ceiling
- •FY2026 borrowing plan totals 1.3 trillion baht
- •Deficit projected to fall below 3% by 2027
Pulse Analysis
The finance ministry’s new directive reflects a tightening of fiscal discipline as Thailand grapples with a public debt ratio that hovers just below the 70% ceiling. By mandating that state‑owned enterprises (SOEs) exhaust their own cash flows before tapping external financing, policymakers aim to prevent the accumulation of debt that would be recorded as sovereign liabilities. This move aligns with the Public Debt Management Office’s broader strategy to keep borrowing within manageable limits while still supporting essential infrastructure development.
For SOEs, the policy reshapes capital‑raising tactics, pushing them toward public‑private partnership (PPP) structures and dedicated infrastructure funds. These alternatives can unlock private sector expertise and risk‑sharing without inflating the government's balance sheet. However, the shift may also slow project timelines if suitable partners are not readily available, prompting firms to reassess investment pipelines and prioritize projects with higher internal returns. The emphasis on self‑financing could improve operational efficiency but may also constrain expansion in sectors where cash generation is limited.
Looking ahead, Thailand’s medium‑term fiscal framework (2027‑2030) projects a gradual reduction in the fiscal deficit to under 3% of GDP and maintains public debt around the 68‑70% range. By curbing SOE borrowing, the government reinforces its commitment to these targets, bolstering investor confidence and preserving fiscal space for future shocks. The disciplined approach signals to international markets that Thailand remains vigilant about debt sustainability, which could translate into more favorable borrowing terms and a stable macroeconomic environment.
State firms told to avoid borrowing when investing
The Finance Ministry may require state‑owned enterprises planning new investments to rely primarily on their own revenues to reduce the burden on public debt.
According to Jindarat Viriyataveekul, director‑general of the Public Debt Management Office (PDMO), caretaker finance minister Ekniti Nitithanprapas set a policy for state‑owned enterprises planning to invest, requiring them to first use their own income before relying on borrowing.
Alternatively, these enterprises may invest through public‑private partnership schemes or infrastructure funds.
Under the PDMO’s definition, borrowing by state‑owned enterprises is classified as public debt.
As of December 2025, the government’s public debt tallied 66.1 % of GDP, or 12.5 trillion baht, while the statutory ceiling is 70 %.
The debt burden of state‑owned enterprises – including both government‑guaranteed and non‑guaranteed loans combined – amounted to 1.2 trillion baht.
The government’s total borrowing plan for fiscal 2026 covering both new loans and debt refinancing tallies 1.3 trillion baht.
In the first quarter of fiscal 2026 (October to December), PDMO executed 33 % of the planned borrowing.
Under the government’s latest medium‑term fiscal framework for 2027‑2030, the fiscal deficit is expected to be reduced to no more than 3 % of GDP per year, keeping public debt below the 70 % ceiling.
According to the Finance Ministry’s projections, the fiscal deficit‑to‑GDP ratio will gradually decline from fiscal 2026, when the deficit is expected to total 4.4 % of GDP at the end of the fiscal year, while public debt is projected at 68.2 % of GDP.
Thereafter, the budget deficit is expected to continue to narrow. In fiscal 2027, the deficit is projected at 3.9 % of GDP and public debt at 69.4 % of GDP.
In 2028, the fiscal deficit is projected at 3.3 % of GDP, with public debt at 69.99 % of GDP, followed by a deficit forecast of 2.7 % of GDP in fiscal 2029 and public debt at 69.5 % of GDP.
In fiscal 2030, the deficit level is projected at 2.1 % of GDP and public debt at 68.2 % of GDP.
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