Thai Government Approves 12-Month Debt Moratorium for Farmers
The Thai government has sanctioned a 12-month debt moratorium for farmers struggling under the burdens of loans from the Bank of Agriculture and Agricultural Cooperatives (BAAC). This scheme, which begins on October 1, extends to approximately 2.698 million farmers who owe up to Bt300,000 across all their loan contracts with the BAAC. Farmers can apply for this relief until September 30 of the subsequent year.
Non-Performing Loans Also Included
Deputy Finance Minister Julapun Amornvivat announced that the moratorium is also open to farmers with Non-Performing Loans (NPLs). However, to become eligible, these farmers must first refinance their debts with the BAAC. This debt relief initiative is only the first phase of a three-year debt moratorium scheme by the government for farmers who are in debt.
Additional Support: Training for Skill Enhancement
In conjunction with the debt moratorium, the BAAC will collaborate with other state agencies to arrange training courses for farmers. These courses are designed to enhance the skills of farmers and improve their potential to increase revenue and competitiveness. This dual approach of providing financial relief and skill enhancement is directed towards supporting and empowering the farming community, helping farmers to overcome financial challenges and to thrive in their profession.
Addressing a Significant Issue
Thailand, known as the world’s second-largest rice exporter, has one of Asia’s highest levels of household debt. In 2021, 66.7 per cent of all agricultural households were found to be in debt, largely due to farming-related activities. Many farming families are financially burdened after borrowing to fund their crops, with debt often spanning generations. This debt plan is part of a series of measures prepared by the new government to revitalize a sluggish economy, weighed down by declining exports and falling investor confidence.
Cost to the Government
The suspension of both the principal and interest payments for these farmers will cost the government about 11 billion baht, approximately 302.8 million USD per year. The cabinet approved about 12 billion baht on Tuesday for this cause, signifying the government’s commitment to provide substantial support to its farming community.
Critics and Suggestions
While the government’s measures are seen as a significant step towards easing the burden of farmers, critics have been skeptical, citing the failures of previous debt suspension schemes. Suggestions for improving the scheme include making it a short-term measure introduced to handle crises, designing it to target debtors who have the potential to repay loans but are facing temporary financial difficulty, and implementing measures that will reduce farmers’ dependence on debt suspension and prevent moral hazard.
The Thai government’s initiative to provide a 12-month debt moratorium for farmers, along with skill-enhancement training courses, signifies a significant step towards addressing the country’s high household debt levels and supporting its farming community. The success of this scheme in the long run will depend on its implementation and the government’s response to potential challenges.
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