IMF urges Thailand to give baht-up households a helping hand
The International Monetary Fund (IMF) has warned Thailand to boost protections for struggling families or risk keeping millions trapped in a cycle of crushing debt, much of it borrowed just to put food on the table.
In a hard-hitting Country Focus report released on April 9, the global financial watchdog highlighted that more than half of Thai workers lack formal employment, leaving them without job security or basic social protections and dangerously exposed to economic shocks.
“Many households have no choice but to borrow just to cover daily living expenses,” the report said, adding that a lack of stability is fuelling a spiral of informal debt that threatens the country’s financial system.
While Thailand’s household debt-to-GDP ratio has dipped slightly to 89%, down from its pandemic peak, it’s still historically high and an IMF spokesperson warns that tackling the problem requires careful handling.
“Fixing household debt too fast, without thinking of the bigger picture, could backfire. It risks tightening credit, hurting consumer spending, and knocking business confidence.”
To strike the right balance, the IMF is calling on Thai policymakers to bolster social protections, reduce reliance on informal lending, and support long-term financial resilience.
Thai officials have already rolled out several initiatives, including repayment assistance, debt restructuring, regulatory crackdowns and financial literacy drives.
One of the biggest pushes came with the launch of the You Fight, We Help relief scheme in December 2024, which allows banks to offer struggling borrowers lower monthly payments, waived interest, and flexible repayment terms.
Meanwhile, the Bank of Thailand’s January 2024 responsible lending guidelines have helped restructure over 7 million accounts, while new borrowing caps based on asset levels aim to rein in excessive debt.
But the IMF says more needs to be done, particularly to tackle persistent, non-viable debt that locks borrowers out of formal credit for good.
Bangkok Post reported that it recommends streamlining personal bankruptcy laws and building an efficient, fair debt resolution system. It also wants the Thai government to team up with the private sector to bring down the cost of resolving household debt.
As a case in point, the IMF pointed to Brazil’s recent success, where a programme allowed defaulters to settle loans at steep discounts with the help of banks, not taxpayers. Between July 2023 and May 2024, it helped over 15 million people restructure debts worth 52 billion reals, nearly 0.5% of Brazil’s GDP.
The message is clear: if Thailand wants to avoid a household debt crisis turning into a national one, it needs to invest in its people, or risk letting the most vulnerable slip through the cracks.
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