NESDC says fiscal space down to 3-4%, watch for MTFF review and VAT move
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Thailand has only about 3-4% of GDP in remaining fiscal space, with public debt nearing the 70%-of-GDP ceiling, even after Fitch Ratings raised its outlook on Thailand's credit rating to Stable from Negative. Danucha Pichayanan, Secretary-General of the National Economic and Social Development Council, said at a seminar titled "Strengthening the Treasury, Building Thailand's Future" that if another major crisis hits, the fiscal space may not be enough, and proposed prioritising spending and tightening the budget for another 2-3 years. Dr. Pan Ananapibut, Director of the Tax Policy Bureau at the Fiscal Policy Office, noted that Thailand has kept its VAT rate at 7% since 1999, among the lowest in the world, and that it accounts for 29.3% of total government revenue. A 1% VAT increase could raise about 10 billion baht, compared with new taxes such as an EV tax, an overseas travel tax, a sin tax, a sweet and salty tax, and a foreign tourist landing fee, which might bring in only 100 million baht or 1 billion baht. Meanwhile, Professor Dr. Athiphat Muthitacharoen, a lecturer at the Faculty of Economics at Chulalongkorn University, disclosed that the Medium-Term Fiscal Framework, or MTFF, sets a VAT increase to 8.5% in 2028 and 10% in 2030, along with a 1-baht-per-litre increase in gasoline and diesel taxes in 2027. The MTFF will be reviewed this October-November, after 400 billion baht in borrowing. Most recently, Dr. Ekniti Nitithanprapas, Deputy Prime Minister and Minister of Finance, said that in fiscal year 2026 Thailand will have only a little over 10 billion baht in fiscal room for borrowing.