Thailand Finance Minister Announces Plan to Buy Bad Household Debt to Stimulate Economy

What's Happening?

Thailand's Finance Minister, Ekniti Nitithanprapas, announced that the government will spend 10 billion baht ($307 million) to purchase bad household debt this month. This initiative is part of a broader strategy to revive the country's sluggish economy, which has been hampered by high levels of household debt. The debt-to-GDP ratio stands at 86.8%, one of the highest in Asia, with total debt amounting to 16.3 trillion baht ($501 billion). The plan will be funded by remaining rehabilitation funds and contribution deductions, avoiding any fiscal budget usage. The announcement led to a nearly 1% rise in the Thai benchmark index SET, marking the highest jump since February 4. The government also aims to enhance fiscal discipline and support technology investments, with significant investments already attracted from companies like Microsoft and TikTok.

Why It's Important?

The initiative to buy bad household debt is crucial for Thailand's economic recovery, as high household debt levels have stifled consumption and growth. By alleviating debt burdens, the government hopes to boost consumer spending and stimulate economic activity. The plan is part of a larger effort to achieve at least 1% growth in the final quarter of 2025, aiming for full-year growth above 2.2%. This compares to last year's 2.5% growth, which lagged behind regional peers. The move also signals Thailand's commitment to fiscal discipline and technological advancement, potentially attracting further foreign investment and enhancing economic resilience.

What's Next?

The government will continue to implement stimulus measures, including a $1.4 billion 'co-payment' subsidy scheme to further boost consumption. The success of these initiatives will be critical in achieving the targeted economic growth. Monitoring the impact of debt relief and investment support on consumer behavior and economic indicators will be essential. Additionally, the government may explore further fiscal and monetary policies to sustain growth and address any emerging economic challenges.