Assessing Thailand’s Debt Ceiling—Room for Recalibration?

The pandemic responses and subsequent fiscal stimulus measures have eroded Thailand’s fiscal space, pushing its public debt close to the ceiling of 70 percent of GDP. While this situation generally calls for fiscal prudence to reduce debt levels, it also raises questions about the adequacy of the current debt ceiling. This paper uses various approaches to assess Thailand’s public debt threshold, beyond which debt could become unsustainable or negatively impact growth. Stochastic simulations are used to account for potential impact of macroeconomic and fiscal shocks in calibrating an appropriate debt ceiling for Thailand.