The inner circles of the Ministry of Finance recently leaked some noteworthy information – farmers who decide to not partake in the upcoming government-implemented debt suspension scheme might be greeted with testimonials. This approach harks back to a plan executed under the Thaksin Shinawatra administration, primed to foster an environment condeucive to financial prudence amongst the farming community.
Let’s take a stroll down memory lane to the time period spanning 2001 to 2004. The Thaksin regime announced a three-year debt suspension plan aimed at individual farmers burdened with debts not exceeding 100,000 baht. The plan hinged on the provision of incentives such as discounted interest rates of 3% levied on those farmers who didn’t opt to partake in this economic initiative. Fascinatingly, an evenly contested split emerged from the data – almost half of the farmers, 49% to be exact, decided against enrolling, leaving a slight majority of 51% who did.
It is the current administration’s prediction that this version of the debt suspension programme will potentially encompass approximately four million small-scale farmers and a further three million small and medium-sized enterprises (SMEs). Short-term relief of three years for small farmers and one year for SMEs is in the pipeline, as per the plan. Detailed disclosure concerning the extent and boundary of the debt suspension hasn’t been forthcoming from the ministry, largely due to the fact that these elements will be indirectly proportional to the government’s ability to handle interest repayments to governmental financial institutions.
However, we do have some historical context in this regard. During the Thaksin government’s tenure, it was decided that the limit for debt suspension per individual would be fixed at 100,000 baht. Under the Yingluck Shinawatra administration, which spanned from 2011 to 2014, this limit was revised upward to 500,000 baht per person.
A distinguishing feature of the current Srettha Thavisin-led programme from its predecessors is the opportunity for participating farmers to obtain supplementary loans from the Bank for Agriculture and Agricultural Cooperatives. These additional funds are intended to provide an avenue for farmers to invest in the enhancement of their farming processes. Credit approval will be largely influenced by the farmers’ capacity to generate enough income to service their debt commitments, as highlighted by the Bangkok Post.
Under the former Thaksin administration, a framework aimed at instituting a more sustainable farming economy was the core objective. Consequently, debt relief was granted to approximately 2.25 million farm households equating to an overall expanse of 15.5 billion baht allocated to cover interest payment obligations. The Yingluck administration meanwhile, extended debt relief provisions to 775,000 farmers, translating to a total debt portfolio worth 90.5 billion baht.
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