Banks told to boost, step up on recovery loans
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The finance minister has urged commercial and state-run banks to accelerate lending and support flood-recovery efforts.
The Finance Ministry is closely watching whether banks are providing adequate lending to support recovery efforts even as the fragile recovery of the global economy poses a high risk, Finance Minister Thirachai Phuvanatnaranubala said.
Speaking after a meeting on economic monitoring with representatives from key economic institutions yesterday, Thirachai said he wanted to know how much money banks had injected into the economy. The lending amounts should be reported to him next week, he told a news conference.
Earlier, Thirachai had targeted lending by banks to support recovery efforts at Bt325 billion, while some critics are worried that the banks may not lend adequately to some firms, particularly small and medium-sized enterprises.
Thawatchai Yongkittikul, secretary-general of the Thai Bankers Association, said some large commercial banks had reported to him that their lending had jumped by Bt100 billion recently. Companies hit hard by the devastating floods have sought loans to buy new machinery.
“I think we have adequate liquidity,” Thawatchai said.
Thirachai said the Finance Ministry was also willing to allow more foreign insurance specialists to evaluate damages, which should lead to faster payment of claims. “The insurance industry says it may need a year to pay 75 per cent of the claims, but I have urged them to pay within six months.”
He said large companies could renew their insurance contracts but he was worried that small firms and households might find difficulty in doing so.
Pravej Ongartsittigul, secretary-general of the Office of the Insurance Commission, said he would consult the insurance industry on whether firms could speed up claims payments. Companies have insured their property in an amount totalling about Bt700 billion and the damages account for about 10-20 per cent, he said.
Somchai Sujjapongse, director-general of the Fiscal Policy Office, said many countries in Europe were still facing high public debt. “Greece will be closely watched as to whether
it can service its debt due in March,” he said.
The United States cannot use fiscal policy to boost its economy as it plans to cut its budget deficit by US$1.2 trillion (Bt37 trillion) over the next 10 years, he said.
Thirachai said that although financial institutions have accumulated large amounts of European debts, estimated to be about one-third of their total debts, Thailand would not face trouble in borrowing abroad.
“I have learned that international banks are willing to lend to us and our credit rating is good,” he said.
He also expressed confidence that gross domestic product would expand by 5 per cent next year.
He said he had set up an anti-corruption committee to work with the private sector in ensuring transparency of government spending on post-flood recovery. He added that the government would work with provincial governors on emergency spending and other projects under the Bt120-billion spending plan for flood recovery.
