Thailand’s government is preparing to issue an emergency loan decree worth 500,000 million baht to build up financial reserves ahead of what officials describe as compounding economic risks, including a super El Niño weather event and elevated global energy prices.
Deputy Prime Minister Pakorn Nilpraphat confirmed the plan, saying the current state of the treasury is limited and relatively rigid, leaving the government with little room to respond to unexpected crises.
He cited external pressures, including ongoing conflict overseas and the anticipated impact of super El Niño on agricultural output and the broader economy, as key drivers behind the decision.
Under Article 172 of the Thai constitution, the government may issue an emergency royal decree in cases of urgent necessity relating to national security or the economy. Once issued, the decree must be submitted to the House of Representatives for consideration.
Pakorn noted that while the full 500,000 million baht may not be drawn in practice, public debt management principles require the government to first raise the debt ceiling to match the full borrowing amount specified in the law before any drawdown can proceed.
The borrowing decree is expected to proceed alongside a separate budget transfer bill, giving the government multiple funding channels to draw on in the event of a crisis.
However, the emergency loan cannot be issued until the public debt ceiling is raised beyond its current level of 70% of gross domestic product. Thailand’s public debt currently stands at approximately 66% of GDP, meaning there is limited but present fiscal space remaining. The finance ministry will determine the revised ceiling figure.
Michael Kenner, Co-founder of Fazwaz and Managing Director of LIFULL Connect, said the developments carry direct consequences for Thailand’s property sector.
“Thailand’s emergency borrowing plan, with public debt sitting at 66% of GDP, reflects a limited capacity to absorb further economic shocks… Rising energy costs and potential El Niño-driven disruption to agricultural output create real headwinds for construction costs and regional housing demand.
“Institutional investors aren’t stepping back from Thailand, but they are pricing in a higher degree of uncertainty than we’ve seen in recent years.”
Pakorn also addressed the Oil Fund, which currently carries accumulated debt of over 100,000 million baht after years of being used to subsidise energy prices beyond its original mandate. The fund was established to stabilise energy prices during temporary fluctuations only, with a recommended revolving balance of between 20,000 and 40,000 million baht.
A separate proposal for the finance ministry to guarantee an Oil Fund loan of 150,000 million baht remains under consideration. Should additional liquidity be needed in future, the government will need to reassess the fund’s legal framework in line with prevailing economic conditions and the potential for higher energy costs ahead.
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