Bid to replace JICA funding with baht loan
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Finance cites higher cost in yen borrowing; seeks Cabinet approval
The Finance Ministry plans to seek Cabinet approval next Tuesday to replace the more costly Japan International Cooperation Agency (JICA) loan with domestic borrowing to fund construction of the Mass Rapid Transit Authority of Thailand’s Purple Line Phase 3 (Bang Yai-Bang Sue) project.
The ministry is taking such action because the cost to the Kingdom of borrowing in yen is now markedly higher than taking out a baht-denominated loan.
The current overall Purple Line project loan is worth ¥110.85 billion (Bt35.3 billion).
This is split into three parts: Phase 1, for which a deal to borrow ¥62.44 billion was signed on March 31, 2008; Phase 2, for which a deal to borrow ¥16.64 billion was signed on September 28, 2010; and Phase 3, for which an agreement to borrow ¥31.77 billion was signed on June 19 last year.
The loans for Phase 1 and 2 were drawn down as per the Cabinet’s resolution on May 7 this year.
The Finance Ministry will propose that the Cabinet revise the loan for the third phase from JICA-agreed funding to borrowing from domestic banks, which would reduce the construction cost for this part of the project, a ministry source said yesterday.
Since Thailand’s status has been upgraded from middle-income country to upper-middle-income country, the applicable foreign-loan general-terms interest rates for 15-, 20- and 25-year repayment periods have risen from 0.80, 0.95 and 1.4 per cent per annum to 1.5, 1.6 and 1.7 per cent, respectively.
Under the Public Debt Act of 2005, if the source of funding for a Cabinet-approved project needs to be changed, Cabinet approval must be sought again.
