PDMO to fan out debt oversight

The Public Debt Management Office (PDMO) will extend its supervisory role over borrowing to 2,681 state agencies, aiming for a comprehensive approach to maintaining fiscal discipline, says a senior official.

More than 2,000 of the 2,681 state agencies are local administrative organisations, including those for provinces and municipalities, said PDMO director Poomsak Aranyakasemsuk.

The office currently supervises borrowing of a mere 158 state agencies.

The Fiscal Responsibility Act, which took effect on April 20, increases the mandate for the PDMO to supervising borrowing by state agencies.

Although local administrative organisations’ total liabilities of 29 billion baht are considered low in comparison with the country’s public debt of 6.5 trillion baht at the end of May, letting the organisations run up debt freely without oversight could hurt the country’s overall fiscal picture, Mr Poomsak said.

Local administrative organisations’ debt is not counted in the country’s public debt.

The cabinet recently approved a public debt management framework for 2019-21 under the Fiscal Responsibility Act. Under the framework, the ratio of public debt to GDP is still limited to 60%, the government’s debt liabilities are capped at 35% of estimated revenue for that fiscal year, and the government must allocate 2.53.5% of annual budget for principal debt repayment.

Moreover, payment liabilities incurred from pork barrel spending are capped at 30% of annual budget expenditure, while foreign-denominated public debt must not exceed 10% of the overall public debt and 5% of exports and services.

The Fiscal Responsibility Act was designed to maximise budget spending and prevent politicians from repeatedly using off-budget borrowing to finance projects.

Mr Poomsak said there are 5,300 tambon administrative organisations nationwide that are allowed to borrow only when the Interior Ministry permits them to do so.

According to regulations set by a committee on fiscal discipline, local administrative organisations are permitted to borrow for the purpose of investment only, with liabilities capped at 10% of annual revenue.

The government will not guarantee local administrative organisations’ debt and take responsibility for their borrowing, Mr Poomsak said.