Govt moves to ease debt burden

The Finance Ministry has unveiled details regarding 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 overdue.
The three-year interest suspension scheme will cover overdue home loans not exceeding 3 million baht, car loans not exceeding 800,000 baht, and small- and medium-sized enterprises’ loans of up to 3 million baht, Paopoom Rojanasakul, deputy finance minister, said.
Of the debts totalling 1.31 trillion baht, home loan borrowers owe 480 billion baht, car loan borrowers owe 370 billion baht, and SMEs owe 454 billion baht, Mr Paopoom said.
“The government has decided to suspend interest repayments for the debtors because we believe they will be able to clear their debts and get back on their feet quickly if they receive help from the government,” he said.
To compensate for the bank’s interest rate reduction as a result of the measure, the Finance Ministry will allow banks to lower their fee contribution to the Financial Institution Development Fund (FIDF) to 0.23% of deposits, down from the current level of 0.46%, Mr Paopoom said.
The Thai Bankers’ Association (TBA), confirmed the interest suspension scheme will be funded by reducing the FIDF fee contribution for banks.
To avoid moral hazard and ensure the effective reduction of household debt, borrowers who benefit from the suspension must adhere to a debt restructuring plan and refrain from incurring new loans over three years.
Based on debt data as of Oct 31, eligible borrowers need to have signed their loan contracts with banks before Jan 1 of this year and must be facing challenges with their loan repayments.
The initiative is designed to help targeted borrowers reduce their debt burden and encourage financial discipline throughout the restructuring period, the TBA said. As of June, Thailand’s household-to-GDP ratio was 89.6%, and household debt was 16.3 trillion baht, among the highest levels in Asia.
Meanwhile, Deputy Finance Minister Julapun Amornvivat said on Wednesday the state welfare committee will meet on Thursday to review eligibility criteria for state welfare cards.
New registration will be open in March next year for those wishing to apply, Mr Julapun said.
The Finance Ministry says data needs to be reprocessed to determine qualifications for vulnerable groups, as some people may have earned enough to exit a vulnerable category, losing their eligibility for benefits.
The ministry established a policy of reviewing the eligibility of state welfare cardholders every two years. The last review occurred in 2022, and the following review was scheduled to begin this year.
However, efforts addressing the flooding crisis in parts of the country postponed the new registration review until early 2025.
The main criteria for receiving the state welfare card is having a person’s and family’s annual income not exceed 100,000 baht. This figure is calculated based on a minimum wage of 300 baht daily. In the latest registration round for the state welfare card in 2022, the number of eligible recipients was 13.5 million, down from 14.9 million in the previous round.