PDMO budgets up to B50bn for yearly borrowing in EEC

The Public Debt Management Office (PDMO) plans to earmark 30-50 billion baht a year from its annual borrowing to finance the government’s 1-trillion-baht infrastructure investment in the muchtouted Eastern Economic Corridor (EEC) project.

The government is restricted to borrowing up to 20% of the annual budget expenditure or 600 billion baht a year. Some 30-50 billion baht of the borrowing will be allocated to the EEC’s infrastructure investment, said Theeraj Athanavanich, a bond market adviser to the PDMO.

The government’s borrowing cost is still low despite a rising interest rate trend after a series of rate hikes by the US Federal Reserve, while Thailand’s liquidity surplus of 2 trillion baht is sufficient for fund mobilisation of both the government and private sector, Mr Theeraj said.

Take the government’s 10-year bond issued a few weeks ago as an example. Its yield at 2.42% was below the bond yield offered earlier this year at 2.55%, while the recently issued bond’s bid-to-coverage ratio — an indicator of bond demand in auctions — was as much as five times.

The PDMO over the past 3-4 years locked in low interest rates to alleviate volatility and extend the debt maturity period.

The average public debt cost has fallen to 3.5% from 3.9% for fiscal 2014. Fixed interest debt accounts for 90% of total public debt, of which maturity averages 11 years.

Mr Theeraj said EEC infrastructure investment over the next five years through the public-private partnership scheme will be 580 billion baht; government borrowing is projected at 300 billion; state enterprises’ income contribution is forecast at 90 billion; revolving funds contributed by state enterprises’ toll expressway will be 10 billion; and other sources are to account for the rest.

The EEC plan will come in three phases: urgent, intermediate and long-term.

The urgent phase, during 2017-18, is intended to lure both domestic and foreign investment to the EEC; the intermediate phase, 2019-21, focuses on transport development; and the third phase, from 2022 onwards, aims to create sustainable development and bolster the infrastructure network to link neighbouring countries.

Prime Minister Prayut Chan-o-cha said previously that the initial focus would be technology and human resource development.

Under the intermediate plan, five infrastructure projects worth 607 billion baht are being put on the front burner. These are the Don Mueang-Suvarnabhumi-U-tapao high-speed rail network, worth 236 billion baht; the U-tapao airport upgrades, worth 200 billion; the maintenance, repair and overhaul facility at U-tapao airport, worth 10 billion; the third phase of Map Ta Phut port development, worth 150 billion; and the third phase of Laem Chabang port, worth 11 billion.

The EEC’s 10 targeted industries are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical services.