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Thailand’s government has approved an emergency decree allowing it to borrow up to 400 billion baht (about $12.2 billion) to mitigate the economic fallout from the war in the Middle East, where higher living costs have become the main pressure point. The draft decree is expected to be submitted to parliament next week for discussion.
The emergency mechanism is intended to let the government act faster than it could through the ordinary legislative process. Prime Minister Anutin Charnvirakul said the government is responsible for preventing the economy from slipping into stagflation—stagnant growth alongside high inflation.
Authorities initially considered borrowing up to 500 billion baht, but reduced the figure to 400 billion baht due to concerns about fiscal health. Thailand has also been considering whether to raise its debt ceiling, currently set at 70% of GDP; with the smaller borrowing size, the government said that step is unnecessary.
Under the plan, 200 billion baht would be used to reduce living costs for low- and middle-income earners, while also supporting farmers and other vulnerable groups. The remainder would be allocated to structural reforms, including promoting the installation of renewable energy equipment and the use of electric vehicles.
A monitoring committee would be established to oversee the use of the funds, chaired by a senior official from the Ministry of Finance.
According to Nikkei Asia, the emergency borrowing proposal comes amid growing economic pressure linked to the Iran conflict. Thailand relies on the Middle East for nearly half of its energy supply, and disruptions in transit through the Hormuz Strait have pushed up fuel prices. The pressure then spread to food prices and transport services, raising overall living costs.
In response to the pressure, Thailand’s Finance Ministry cut its 2026 GDP growth forecast at the end of April from 2% to 1.6%. Kasikorn Research Center (KResearch) also lowered its growth outlook for Thailand from 1.9% to 1.2%, warning that the risk of stagflation could emerge from mid-2026.
Thailand’s debt-to-GDP ratio rose from 59% after the Asian financial crisis in the late 1990s to 35% by 2008, then increased again during the Covid-19 pandemic and stood at 66% as of April 2026—the highest level since 1998.
KResearch head Lalita Thienprasiddhi said heavy government borrowing since the Covid-19 outbreak contributed to Moody’s lowering Thailand’s national credit outlook. The Thai government rejected that concern. Finance Minister Ekniti Nitithanprapas said Thailand’s debt-to-GDP ratio remains far lower than many developed European countries and added that credit ratings depend not only on the size of debt, but also on how borrowed funds are used.
Analysts noted that Thailand’s credit risk is not entirely negative. Moody’s last month raised the country’s outlook from negative to stable while keeping the sovereign rating at Baa1. Moody’s cited easing concerns related to U.S. tariff policy and signs of improvement in domestic investment. However, it also warned that high oil prices, rising debt, and a still-weak growth outlook could pose risks in the medium term.
The emergency borrowing is expected to ease near-term pressures for households and businesses. At the same time, it could complicate Thailand’s fiscal outlook if the funds are not used effectively.
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