Thailand approved a debt moratorium plan that will benefit millions of farmers struggling to pay back about 283 billion baht ($8 billion) of loans as Prime Minister Srettha Thavisin rolled out more measures to spur economic growth.
Srettha’s cabinet on Tuesday gave the nod to set aside 12 billion baht from the state budget this year to cover the interest cost on loans taken by an estimated 2.7 million farmers eligible for the debt suspension. The three-year moratorium, effective from October 1, will likely cost the government about 30 billion baht, Deputy Finance Minister Julapun Amornvivat told a briefing.
The debt relief for farmers, a key support base for Srettha’s Pheu Thai Party, is part of a series of stimulus policies unveiled by the new government to lift economic growth to an average 5 percent annually. While the past governments spent a significant amount of money in alleviating farmer debt burden, it has failed to stem a surge in household debt level to 90 percent of GDP.
“This time will be different,” said Julapun, adding that the government will not only suspend interest and principal on loans taken by farmers but also provide trainings, fresh loans and other incentives to lower bad debts.
More than 90 percent of Thai farmer households are indebted at an average of 450,000 baht, and the vicious cycle of debt and reliance on credit to overcome the burden pushes them into a trap, according to a study by the Puey Ungphakorn Institute of Economic Research.
The cabinet also approved setting up of a committee to work out details of the debt relief program and a one-year debt freeze for small- and medium-sized businesses affected by the pandemic, according to government spokesman Chai Wacharonke.
Other measures approved by the cabinet include:
- Operational budget of 1.38 trillion baht and 259 billion baht investment for 46 state enterprises for the fiscal year starting October 1
- Approved 2.2 trillion baht public debt management plan for the 2024 fiscal year, which include new borrowing of 194.4 billion baht, debt restructuring and debt repayment
- The National Housing Authority, Dhanarak Asset Development Co., the State Railway of Thailand and the Bangkok Mass Transit Authority to borrow funds next fiscal year to manage their businesses.
Argentina’s soy
The world’s biggest crop trading houses have a message for the next president of Argentina: Free up soy production and exports, or risk getting left behind by rival suppliers Brazil and the United States.
Officials from Cargill Inc., Louis Dreyfus Co., and China’s state-owned Cofco Corp. were unanimous in their concern over the South American nation’s outlook as it heads toward a crucial election next month.
“It’s very sad for me to see how Argentina has lost influence and relevance in global markets,” Pablo Scarafoni, head of commercial operations for Cargill in South America, said last week at a soybean conference in the crop-trading hub of Rosario. Once a dominant player in the region, Argentina has seen its agricultural sector wither under the heavy hand of the state.
“While Brazil is growing with gigantic strides helped by the political and economic framework, while the US also grows with policies like biofuel mandates, Argentina’s soy production is stagnant,” Scarafoni said.
Argentines vote in a presidential election on October 22, with the stage set for a shift away from state intervention in the economy that’s left the resource-rich country mired in crisis. Net reserves of dollars are in negative territory, inflation is running at nearly 125 percent, and about two of every five Argentines live in poverty.
Myriad government restrictions, compounded by three consecutive droughts, have particularly hurt agriculture. Farm revenues and investments have been constrained by export taxes of up to 33 percent for soy, quotas for cargoes sold abroad, and currency controls.
“Where do we want to go as a country?” Scarafoni asked. “Do we want to generate more dollars, or do we want to settle for small production, farmers who aren’t profitable, and a processing-exports industry in decline?” Bloomberg News
Image credits: Bloomberg
