At the Public Debt Management Office, various models show how precarious the situation stands. If combined with the projected additional losses by the Financial Institutions Development Fund, total debt in five years under a more expansionary fiscal policy would rise to 1.6 trillion baht, excluding interest. The PDMO is drafting a five-year debt management plan based on spending priorities outlined in the ninth social and economic development plan running from Oct 2001 to 2006. A first draft is expected to be completed by the end of the year, with revisions to be made later once the new government is formed and spending priorities defined. Paying the bill The largest portion of the public debt comes from losses incurred by the Financial Institutions Development Fund from its bail-out of banks and finance companies over the course of the crisis.
Current policy calls for principal losses to be paid through two sources.
First, from proceeds gained through the privatisation of state enterprises, but over the past two years, poor market conditions and public resistance have slowed the privatisation process. To date, share sales have reaped the government only around 900 million baht in funds, primarily from the divestment of shares in Electricity Generating Co and PTT Exploration and Production. The Finance Ministry says until economic prospects improve to allow the budget position to return to surplus, existing debt must be continuously rolled over. Foreign debt increasingly is being refinanced through domestic borrowings to take advantage of lower interest charges and to minimise foreign exchange risks in the future. As for the 800 billion baht in additional losses of the Financial Institutions Development Fund which remain to be fiscalised, a cabinet decision this year agreed to have the Finance Ministry guarantee bonds issued by the fund, rather than serve as the issuer itself.