The government aims to solve 16 trillion baht household debt within four years.

Chatrudee Theparat

The government aims to solve 16 trillion baht household debt within four years.

Yesterday, the government kicked off the measure. Prime Minister Sreetha Thavisin said currently the country’s household debt totals 16 trillion baht, which accounts for 90% to GDP. He said he will spend four years of this administration to solve this problem.

He said the government will launch relief measures to assist four groups. The first is debtors with good repayment records, but their cash flow is hit by the Covid-19 pandemic, making them even more difficult to repay loan and finally falling into bad debts.

In addition, debt suspension programs are launched to help those owing the Bank for Agriculture and Agricultural Cooperatives and the Government Savings Bank, which is estimated about 1.1 million in numbers. Small debtors of commercial banks will be financially restructured, with an introduction of one-year suspension. The government expected to assist around 100,000 of small debtors.

The second group is those who earn permanent income but suffer a huge debt, especially government officers like police, soldiers and teachers, who get loans from financial institutes and credit cards. They will get help via three solutions: reduced interest rates, debt consolidation such as existing co-operatives, and appropriate salary deduction levels so that they can service debts and still have money left for daily living. The government will ask for related ministries to provide relief by following the regulation of the Education Ministry which requires a 30% money left for daily living after monthly debt payment. About 900,000 teachers have faced debt problems that could be resolved.

Personal loans with bad debts, they can participate in the project of the Bank of Thailand, and creditors in order to restructure bad debts. For a repayment period of ten years, its interest rate is cut to 3-5% from current 16-25%.

The third group is those who earn uncertain incomes, including farmers and students borrowing from the Student Loan Fund. Debt restructuring, interest rate reductions and the scrapping of loan guarantors would be introduced to help borrowers, estimated 2.3 million students. from the Student Loan Fund.

Mr Sreetha said farmers would be offered a three-year debt suspension. There are 1.5 million farmers are expected to get assistance.

The fourth group is those to have bad debts with state financial institutions for a long period. They will get relief via a debt transfer program. To do so, their debts will be transferred to a joint-venture company which operates asset management. It will be set up by state banks for debt restructuring. This measure would assist at least 3 million people.

The prime minister's chief adviser, Kittirat Na Ranong said out of 16 trillion baht of household debt, there are five million debtors with 12 million accountings are in trouble. There are 23.8 million cardholders with 540 billion baht debts. The government is concerned over 1.1 million cardholders’ debt of 67 billion baht.

The government plans to allocate a 7 billion baht budget to help debtors who have suffered from the pandemic. Soon the finance ministry will propose the cabinet to launch a package measure to assist four groups.