PDMO plans B99bn in loans

Funding needed for megaprojects

The Public Debt Management Office (PDMO) plans to take out loans worth 98.6 billion baht this fiscal year to finance the government’s big-ticket infrastructure plans, its head says.

Mega-infrastructure projects that need funding in the 2018 fiscal year include the high-speed rail line stretching from Bangkok to Nakhon Ratchasima, the Orange Line electric train project connecting Thailand Cultural Centre with Min Buri, and five double-track train routes.

Around 10 billion baht in loans are expected to be doled out during the three months to March, said Prapas Kong-Ied, director-general of PDMO.

The 98.6-billion-baht loan package is part of the 1.7-trillion transport infrastructure investment plan, of which 60% will be funded by domestic borrowing, 20% by the public-private partnership (PPP) scheme, 10% by the government’s budget expenditure, 2% by the planned Thailand Future Fund (TFF), and the remainder by state enterprise income.

He said 51 billion baht worth of loans were drawn down to finance the bigticket infrastructure projects in the 2017 fiscal year.

State investment is considered to be the main growth driver for the economy amid the uneven economic recovery and the plan to ramp up investment in 2018 is expected to help propel economic growth to the highest rate since 2012. The Fiscal Policy Office recently raised its growth forecast to 4.2% this year from 3.8%.

PDMO aims to borrow 1.12 trillion baht for this fiscal year, largely from the domestic market, through government bonds and other debt instruments, said Mr Prapas. Foreign-denominated debt to be secured from overseas financial institutions will be required to fund projects with imported technology.

The office will apply risk management strategies, covering foreign exchange and interest rates, to borrowing plans by balancing risks and costs.

The government’s risk from foreign exchange rates is still low as foreign-denominated debt is a mere 0.9% of total public debt, he said.

PDMO will speed up hedging against foreign exchange risks and refinance foreign-denominated debt with interest rates higher than the market rate by switching to domestic borrowing sources, said Mr Prapas.

PDMO planned to swap foreign-denominated loans worth 36.5 billion baht lent by the Japan International Cooperation Agency into baht-denomination debt in phases, starting with converting 2.5 billion debt in April, 15 billion in June and the remainder later.

In the meantime, the office will offer an additional 5 billion baht in savings bonds to serve public demand after the first two lots were sold out.

The subscription period for the new batch of savings bonds is Feb 12 to March 30, 2018, while the maturity period and coupon rates will be the same as for the sold-out lot, he said.

The new savings bonds will have threeand seven-year maturities. The three-year bonds will carry a coupon rate of 1.85% and the longer-dated notes a 2.45% rate.

Thai citizens who reside in the country are eligible to subscribe to 3 billion baht in savings bonds, with a maximum subscription of 2 million baht from each selling agent.

Savings bonds are being sold at Bangkok Bank, Krungthai Bank, Kasikornbank and Siam Commercial Bank branches, ATMs and online.

The Finance Ministry issued the first batch of 15 billion baht in savings bonds for fiscal 2018 in November last year and the second last month.