A new World Bank report estimates public spending on post-flood rehabilitation in Thailand could reach 235 billion baht by 2014, but experts say this would still not exceed the country's public debt ceiling.
"The government can accommodate this flood-related damage and loss with the existing public debt ceiling. Whether it decides to raise funds from foreign or domestic organisations is up to the discretion of the government, but scope remains for borrowing,
" Kirida Bhaopichitr, a senior economist at the bank, said of the preliminary assessment of post-flood recovery rehabilitation.
Thailand's public debt now stands at 40.2% of gross domestic product (GDP), while the debt ceiling stands at 60% or 600 billion baht.
The private sector is expected to need most of that at 520 billion baht and the public sector the other 235 billion.
The production sector will require the lion's share of the money, with the finance and banking sub-sector taking most of that, followed by the manufacturing sub-sector and water-resources management.
"The state can accommodate these projects alongside existing plans. However, implementation may involve some reprioritisation as to what would be best for the country's recovery," said Annette Dixon, the World Bank's country director for Cambodia, Laos, Malaysia, Thailand and Burma.
"Given that the scale of this disaster is unprecedented in terms of the provinces it hit, the number of lives affected and impacts on the economic infrastructure of the country, it would be only prudent for the government to focus on what is most needed for recovery and to enable the country to remain competitive in the future."
Total damage and losses are estimated at about about 1.36 trillion baht _ 1.28 trillion or 94% in private damage and 81.4 billion in damage to the public sector.
The World Bank estimates Thailand's GDP growth at 4% next year and 5.6% in 2013.
"The country can also take this as an opportunity to 'build back better' _ not just building back but doing it in such a sustainable way as to enable it to withstand volatility in climate change in the future as well," said Ms Dixon.
The assessment report is preliminary. A revised version will be submitted to the government at the end of next month.
Meanwhile, HSBC predicts V-shaped growth for the Thai economy after the floodwater recedes _ 4.5% next year after a year-on-year contraction of 5% in this year's fourth quarter.
Frederic Neumann, co-head of Asian economic research, said the research house has cut this year's GDP growth to 1.7% from 3.9% projected earlier.
The key engine will be government spending after the crisis, with a 1% increase expected in state expenditures to help boost the country's real GDP by 0.2 percentage points in the following quarter, he said.
Dr Neumann expects the Bank of Thailand will cut its policy rate by 0.25 percentage points next month from 3.5% now while maintaining the one-day repurchase rate to ease economic pressure.
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