BANGKOK — Thailand on Tuesday revealed plans to provide $ 312 million in loans to help its financially strapped farmers, many of whom are in debt to loan sharks, as part of the military junta’s latest move to help stimulate the economy.
Usurers, who charge up to 60% interest a year, have thrived amid rising household debt, which has reached 82.3% of gross domestic product this year.
Economists fear that Thailand’s high household debt will curtail consumption, a major engine of the country’s economic growth.
Thai rice farmers in particular were injured after a botched rice subsidy program many have not been paid. By extending the loans, the military government hopes to relieve farmers of their debt so that they can eventually spend more comfortably.
Loan debts account for 49.1% of the country’s household debt, said Somsak Kangteerawat, vice president of the Bank for Agriculture and Agricultural Cooperatives, citing the latest Chamber University survey of Thai trade.
“The bank has set up a budget of 10 billion baht [$312 million] to help farmers and their family members solve their debt problems, ”Somsak said.
Each borrower can apply for a loan of no more than 100,000 baht, or $ 3,125, at an interest rate of 12% per annum, according to the bank’s vice president. The loan must be repaid within 10 years.
The one-year loan program, which begins September 1, aims to help around 150,000 farmers, Somsak said.
Economists have praised the loans.
“This shows the government’s determination to tackle the debt problems of farmers,” said Amonthep Chawla, head of research at
The government is working to identify the root causes of the high debts owed to loan sharks and others outside the formal lending system, said Rungson Sriworasat, permanent secretary in the finance ministry.
After months of political stability in Thailand, the military seized power in May, investing in infrastructure projects and implementing a range of other policies that have helped boost the weak economy.
In the second quarter of this year, the country’s economy rebounded after contracting in the previous quarter, increasing 0.4 percent year-on-year and 0.9 percent quarter-on-quarter.
Corrections and amplifications
Somsak Kangteerawat’s last name was misspelled as Kanteerawat in an article published Tuesday on Thailand’s plans to provide loans to farmers.
Write to Nopparat Chaichalearmmongkol at [email protected]
Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
