ASK Thai government officials and they will fume that it is just unfair. How can Thailand be denied an “A” sovereign credit rating when other countries with poorer macroeconomic numbers already have that coveted assessment?

Securing a high credit rating helps a country access cheap funding on international bond markets. And for the Thais, the obvious comparison is with Malaysia.

All three major rating agencies – Standard & Poor’s, Moody’s and Fitch – give Malaysia an A grade. Those same agencies put Thailand at the upper end of the B category, meaning that while Thai bonds are still rated investment grade, they are not regarded as being of the same quality as Malaysia’s.

The macroeconomic numbers, however, suggest otherwise. Thailand’s public debt stands at around 44 per cent of gross domestic product, significantly lower than Malaysia’s 53.7 per cent. And while both countries have fiscal deficits, Malaysia’s is proportionately higher (4.5 per cent of GDP last year) compared to that of Thailand (3 per cent). Both countries also hold international reserves equal to more than nine months of retained imports.

The reality, however, is that such numbers are not the only factors rating agencies look at when making their assessments. Also considered is the impact of more subjective political variables. While Malaysia certainly has its problems, the political impasse in Thailand seems far riskier.

Thailand’s recent political history, involving military coups, constitutional change and deadly street clashes, cannot be ignored. Malaysia’s political difficulties will be dealt with at the ballot box in a couple of months; Thailand’s could easily be settled at the point of a gun.

Despite the comfortable parliamentary majority that Thai Prime Minister Yingluck Shinawatra’s Pheu Thai Party secured in the 2011 elections, government economic planners are far more easily sidetracked by urgent, short-term political considerations than in most other countries. Frequent changes of government have not helped either.

Education reform, which could help promote the country’s long-term economic prospects, is already being neglected.

Thailand remains bitterly divided between yellow- and red-shirt protesters, together with their respective allies. A loose grouping of middle-class professionals and royalists, yellow-shirt protesters supported the 2006 military coup that ousted Ms Yingluck’s brother, Mr Thaksin Shinawatra.

The red shirts, on the other hand, hotly oppose what they see as attempts by the urban and military elite to monopolise political power. Sympathetic to Mr Thaksin, they include students, left-wing activists, farmers and some businessmen.

Both groups were responsible for violent street protests in recent years. And as Ms Yingluck well knows, a future round of violence could trigger yet another military coup.

In order to maintain strong support among rural voters, her government implemented several populist policies, some of which are contributing to the growing fiscal deficit. According to the World Bank, a controversial rice-buyback scheme alone was responsible for a 115 billion baht (S$4.8 billion) loss from the 2011-12 bumper harvest.

The government says it is aiming for a balanced budget by 2017. The maximum level of public debt is officially estimated at 49.9 per cent of GDP. But critics give much higher debt projections. “No one in this government is concerned with fiscal discipline,” former finance minister Pridiyathorn Devakula told an economic forum in Bangkok last month.

There is certainly plenty on the political calendar to worry about this year. The International Court of Justice is due to rule later on Bangkok’s acrimonious dispute with Cambodia over the ownership of the Preah Vihear temple. Should Thailand’s claim be rejected, as seems entirely possible, Ms Yingluck could face serious protests from citizens accusing her of not doing enough to defend Thailand’s cultural heritage.

The rising cost of living and lower prices of agricultural produce are also causing concern. Street protests by farmers could, if left unaddressed, seriously undermine the government’s support in rural areas. And this, in turn, could give the government’s opponents outside Parliament the opportunity they are looking for.

But it is the government’s push to amend the present Constitution, drafted by a military junta following the 2006 coup, that is potentially far more serious. The Yingluck government sees it as anti-democratic. Proposed changes include a return to a fully elected Senate, increased provisions for amnesty, and limits on the power of judicial and independent bodies to scrutinise elected politicians.

The yellow shirts are opposed to all of these changes, saying any attempt to amend the Constitution would potentially weaken the monarchy. The government also seems to have little inclination for reconciliation. This can be seen in the crackdown on yellow-shirt protesters in November and the murder charges brought against former prime minister Abhisit Vejjajiva in December.

That rating upgrade will just have to wait.

(C) Singapore Press Holdings Limited