(Sept 17): Thailand plans to raise government borrowing by about 8% in the fiscal year starting October to aid economic growth, according to people familiar with the matter.

About 1.1 trillion baht (RM141.57 billion), or 41% of the total US$78 billion, will be fresh borrowing to mainly finance the budget deficit, while the rest has been earmarked for refinancing and restructuring of existing debt, said the people, who declined to be identified as they aren’t authorised to discuss the information before it’s made public. The Public Debt Management Office held a meeting with bond traders and fund managers on Monday (Sept 16) in Bangkok, according to the people.

Jindarat Viriyataveekul, the finance ministry’s public debt advisor, declined to comment on the plan, saying that the information can be disclosed after the financing framework is approved by the debt management committee on Wednesday. While the panel can still tweak the plan, no major changes are likely, the people said.

The government had targeted a 7.6% increase in borrowing for the current fiscal year.

Prime Minister Paetongtarn Shinawatra, who was sworn into office this month, highlighted the need for an urgent economic stimulus in her policy announcement last week. The premier is seeking to boost Southeast Asia’s second-largest economy that’s lagged its neighbours with an average 1.9% growth rate during nearly a decade of military-backed rule.

Thailand’s local bonds have handed dollar-based investors a 7% return this year, outperforming most emerging-market peers. The baht also trumped most emerging market currencies, rising almost 3% against the greenback.

About 1.3 trillion baht of the funding sought will be raised through government bond sales, while the rest will be financed via treasury bills, savings bonds, bond switches and promissory notes, the people said. The government plans to raise spending by 4.2% in the next fiscal year, with the budget deficit projected at 866 billion baht.

The youngest daughter of influential former leader Thaksin Shinawatra was elected prime minister by parliament last month after her predecessor Srettha Thavisin was dismissed by a court over an ethical violation. 

The government plans to auction no more than 322 billion baht of bonds during the October-December period, the people said, compared with 306 billion baht in the previous three months.

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