BANGKOK, THAILAND – Thailand’s incoming government faced mounting pressure to stabilise rising public debt while keeping access to international finance open, as analysts warned of real risks to the country’s credit rating.
Debt level sparks 50:50 downgrade risk
According to Jindarat Viriyataveekul, director-general of the Public Debt Management Office, public debt stood at more than 66% of economic output at the end of 2025, a level seen as moderate globally but high in regional comparison. Analysts therefore saw a 50:50 chance that at least one of the three major rating agencies would downgrade the kingdom, a move that could immediately raise borrowing costs and weigh on capital inflows.
Regional gap weighs on Thailand’s standing
Vietnam’s debt ratio was reported at 31–34% of gross domestic product, roughly half Thailand’s level, while the Philippines stood at under 61%, leaving Bangkok losing ground in the regional rankings. These gaps within Southeast Asia were crucial for rating agencies, which assessed states directly against one another and fed such differences into their outlooks and, in turn, the investment decisions of major global lenders.
Baht-denominated debt cushions currency risk
Stability was supported by the fact that 99.2% of public debt was denominated in baht, leaving little direct exposure to exchange-rate swings, and only 0.23% of liabilities were unhedged. Jindarat said that around 87.3% of government debt carried fixed interest rates, making debt-servicing costs more predictable and softening the impact of short-term market volatility.
Global lenders remain strategically important
Despite the low share of foreign-currency liabilities, Jindarat stressed that Thailand needed to keep its channels open to international creditors such as the World Bank and the Asian Development Bank, as these institutions provided targeted project financing. A large share of funding for key infrastructure projects still came from Japan, and the official underlined that these diversified sources contributed to financial stability and helped secure foreign credit lines.
Fiscal strain and structural headwinds
The share of state revenue currently devoted to debt service stood at 10.3%, below the 12% threshold at which Thai government bonds would be considered high-risk securities, intensifying pressure to expand tax income. At the same time, an ageing population, a shrinking tax base, weak growth, falling tourist numbers and reports of rising corruption were adding to structural burdens, increasing the urgency for the new government to deliver convincing policy responses.
Mixed rating signals and weak growth outlook
While S&P confirmed a BBB+ rating with a stable outlook, both Moody’s and Fitch had revised their outlook on the country downward in 2025, a warning sign when combined with sluggish economic momentum. Forecasts suggested growth in 2025 might reach only 0.7%, as the central bank cut interest rates and warned of possible effects from new US tariffs, while the government debated a realignment of its trade strategy towards the United States and China.
Trade tensions and political uncertainty unsettle markets
Amid growing uncertainty over potential new tariffs from Washington, the government ordered a review of US court rulings on earlier Trump-era duties and opened talks with American partners to limit economic damage. In parallel, Prime Minister Paetongtarn sought to improve export prospects through visits to Vietnam and trade initiatives towards the US, while domestic issues such as the return of her father Thaksin and corruption allegations added to market unease.
Public debate over looming financial risks
Rising debt, weak growth and a shrinking tax base put the country under mounting strain, with observers warning that a downgrade could make credit more expensive and deter investors.
“Is this only a warning signal – or the beginning of larger economic problems?”
said ThaiExaminer, media outlet.