The government is advised to seek methods to increase its revenue-to-GDP ratio following a continuous decline, while remaining prudent in incurring higher levels of debt, says a Finance Ministry source who requested anonymity.
According to the 2022 Fiscal Risk Report released by the Fiscal Policy Office (FPO) on Tuesday, the risk of government revenue collection in fiscal 2023 not meeting its target is low as the economy continues to expand from the previous year.
"However, in the medium term, the government should focus on increasing the revenue-to-GDP ratio, which is likely to continue to decline," the source said.
Revenue risk has improved in line with the economic recovery, but was still lower than the pre-pandemic level of 2019.
Government revenue in fiscal 2022 tallied 2.53 trillion baht, an increase of 6.57% from the previous year, and exceeded the target by 5.49% because of higher income, better private sector performance, and improved private consumption.
For the first seven months of fiscal 2023 (October 2022 to April 2023), the government collected net revenue of 1.38 trillion baht, exceeding the target by 112 billion baht, which was 7.4% higher than the same period in the previous year.
Debt risk remains manageable given close monitoring, with the government cautious regarding an increasing debt level, said the FPO report.
The level of public debt at the end of fiscal 2022 amounted to 10.4 trillion baht, or 60.4% of GDP, increasing because of an expansionary fiscal policy during the pandemic.
In fiscal 2022, the government had a fiscal deficit (including loan expenditure) of 5.81% of GDP, with net loans of 9.95 billion baht, which was high compared with the level in 2019.
The cost of government borrowing has increased to a level similar to 2019, resulting in limited fiscal space and calls for prudence in incurring higher debt levels. The fiscal warning index increased to 3.45 at the end of fiscal 2022, still in normal territory but approaching the warning threshold of 5, said the FPO report.
The estimated public debt-to-GDP ratio at the end of fiscal 2027 is 61.3%, a slight increase from fiscal 2022, as a result of efforts to control fiscal deficit levels at no more than 3% of GDP, according to the "Medium-Term Fiscal Framework for 2024-27".
Public debt as of April 2023 was 10.9 trillion baht, accounting for 61.6% of GDP.
