Bangkok Post – Government takes measures to ease debt burden

Interest rate pause due to payment arrears of B1.31 trillion

The Ministry of Finance has released details of the government’s plan to suspend interest payments for three groups of debtors as part of measures to ease household debt.

On Tuesday, the economic stimulus committee chaired by Prime Minister Paetongtarn Shinawatra approved the plan for borrowers with debts up to one year in arrears.

The three-year interest suspension scheme covers overdue home loans of up to 3 million baht, car loans of up to 800,000 baht and loans to small and medium enterprises of up to 3 million baht, said Paopoom Rojanasakul, Deputy Finance Minister. .

Of debts totaling 1.31 trillion baht, home loan borrowers owe 480 billion baht, car loan borrowers owe 370 billion baht and SMEs owe 454 billion baht, Paopoom said.

“The government has decided to suspend interest payments for the debtors as we believe they can pay off their debts and get back on their feet quickly if they get help from the government,” he said.

To offset the bank’s interest rate cut as a result of the measure, the Finance Ministry will allow banks to reduce their contribution to the Financial Institution Development Fund (FIDF) to 0.23% of deposits, down from the current level of 0.46%. said Mr. Paopoom.

The Thai Bankers’ Association (TBA) has confirmed that the interest suspension scheme will be financed by reducing the FIDF contribution for banks.

To avoid moral hazard and ensure effective reduction of household debt, borrowers benefiting from the suspension must adhere to a debt restructuring plan and refrain from taking out new loans over a three-year period.

Based on the debt data as of October 31, eligible borrowers must have signed their loan contracts with the banks before January 1 this year and should be facing difficulties in repaying their loans.

The initiative is intended to help targeted borrowers reduce their debt burden and encourage financial discipline during the restructuring period, the TBA said. In June, Thailand’s household-to-GDP ratio reached 89.6% and household debt reached 16.3 trillion baht, one of the highest levels in Asia.

Meanwhile, Deputy Finance Minister Julapun Amornvivat said on Wednesday that the state welfare committee will meet on Thursday to review the eligibility criteria for state welfare cards.

New registration will open in March next year for those who want to sign up, Mr Julapun said.

The Treasury Department says data will need to be reprocessed to determine the qualifications of vulnerable groups because some people may have earned enough to move out of a vulnerable category, making them ineligible for benefits.

The ministry has established a policy that assesses the eligibility of state benefit holders every two years. The last evaluation took place in 2022 and the next evaluation would start this year.

However, efforts to tackle the flooding crisis in parts of the country saw the new registration review postponed until early 2025.

The main criterion for receiving the state welfare card is that the annual income of a person and his family should not exceed 100,000 baht. This figure is calculated based on a minimum wage of 300 baht per day. In the last round of registration for the state assistance card in 2022, the number of eligible recipients was 13.5 million, compared to 14.9 million in the previous round.