Thai Government Faces Challenges in Fundraising Amid Rising Borrowing Costs
The Thai government encounters increased borrowing costs due to foreign investors exiting the bond market, causing a liquidity crisis. With a planned borrowing of 2.4 trillion baht for fiscal year 2024, combined with an economic stimulus plan, the situation is complicated by rising bond yields and inflation concerns. Despite challenges, optimism remains regarding the local bond market’s future.
The Thai government is currently experiencing increased borrowing costs due to significant capital outflows. In the first quarter of this year, approximately 34.3 billion baht exited the Thai bond market. This has resulted in a reduction of outstanding government bonds owned by foreign investors, as the attractiveness of Thai bonds diminishes compared to higher returns on US government securities due to the widening interest rate gap between the two regions.
In conclusion, the Thai government is navigating significant challenges in its funding strategy, characterized by rising borrowing costs, a weakened baht, and capital outflows. However, the local bond market displays resilience, with corporate bond issuance remaining robust. Addressing these financial hurdles and adapting to global economic shifts will be critical for the Thai government as it seeks to stimulate its economy and manage fiscal responsibilities.
Original Source: www.thailand-business-news.com
