The current status of local government borrowing: A case study of Uttaradit Province

Abstract

This study has two objectives: first, to study the regulations, processes and procedures
relating to local governmental borrowing in Thailand; second, to study the current status of local governmental borrowing in Uttaradit Province. This study employs documentary research along with structured interviews to obtain additional information.

This study found that local governmental units in Uttaradit reported borrowing funds was essential to their operations and appropriate because it was directly related to public services and local administration. In addition, the most commonly reported reason for borrowing was that there were not enough funds for investment projects after projected annual expenses, which is a reasonable rationale for borrowing. Moreover, the annual expenditure required to service these debts, including interest, remained a relatively small portion of the entire annual budget and did not negatively impact other budget categories.

It can be concluded that since local governments have smaller budgets for investment, many of them will need to continue borrowing money to finance their public services. However, local governments have to consider their  financial status, benefits from the investment, and their ability to pay off the debt in a timely manner, because if they lack financial discipline and/or do not have access to appropriate consultation and guidance when they borrow, it may negatively affect their long-term  fiscal stability.