Politically, Thailand is still experiencing a difficult period of conflicting interests — but just as concerning are the nation’s current economic difficulties, and their proposed remedies of fiscal stimulus which could create a potentially dangerous debt to GDP imbalance for the mid-  to long-term.

Xinhua reports:

Thailand’s public debt in the future may exceed 60 percent of the country’s gross domestic product (GDP) as the outcome of the government’s economic stimulus packages to shore up the sluggish domestic economy, Prime Minister Abhisit Vejjajiva said Thursday.

However, the public should not panic since foreign countries still have confidence in the Thai economy, he told participants of the National Economic and Social Council meeting, the Thai News Agency reported.

Abhisit made the remarks after Pongpanu Svetarundra, director-general of the Public Debt Management Office, said earlier this week Thailand’s public debt at ending of February stood at about 3.59 trillion baht (101.85 billion U.S. dollars), or 40 percent of GDP.

During 2010 to 2012, the Thai government plans to spend 1.57 trillion baht (44.54 billion U.S. dollars) in investment projects to jumpstart the economy.

This is of course, a dangerous game:   Massive infrastructure spending to the tune of 1.57 trillion baht could indeed provide much needed economic stimulus in the short term, but debt created from such fiscal policies could just as easily become  a ball and chain around the ankle of the Thai economy for years to come.  Foreign financiers remember only too well, the rapid depreciation of the baht in 1997 which precipitated the Asian financial crisis.  Abhisit’s call to “not panic” because foreign financiers still have “confidence” in the Thai economy may indeed be true for the time being, but one has to ask “for how much longer?”, particularly when public debt represents the lion’s share of GDP.

While we watch Thailand’s economic health with deep concern, we do see a potential silver lining within the proposed stimulus:  A possibility for a return to social stability within the kingdom and a reconciliation of the  political differences which have flared in recent months. (Especially if a portion that $44.5 billion stimulus is spent to the benefit of less developed areas of the nation, which have participated less fully in the past decade’s economic growth).