Finance Ministry gets Cabinet nod for 8 loan-guarantee categories
The Cabinet yesterday approved the Finance Ministry's draft announcement on the scope of loan guarantees for state enterprises and government agencies.
The draft specifies eight types of loan that the ministry can guarantee. However, if necessary for the country’s benefit, the ministry may propose that the Cabinet approve additional borrowing outside these eight loan types.
The first type of loan is for infrastructure projects that benefit the general public and that generate high economic and social value.
Second are loans from international agencies, foreign governments, overseas state-owned financial institutions, or foreign financial institutions.
Third is borrowing in tight market conditions. Without a guarantee, borrowing at such times may cause damage to the country.
Fourth are loans for which the ministry has to shoulder full or partial responsibility as ordered by the Cabinet.
Fifth are refinancing loans.
Sixth are loans essential to implement the government’s policies.
Seventh are revolving loans for government agencies, state enterprises and state-owned financial institutions whose product and service prices are under the government’s control.
Eighth are loans for investment or refinancing projects.
Worawit Jampeerat, director of the Budget Bureau, said the provision for Cabinet-approved borrowing outside the eight categories was added to the draft to deal with emergencies such as a global economic crisis when state agencies cannot borrow by themselves. In such instances, the Finance Ministry can consider guaranteeing their loans to mitigate the impact of such circumstances on the agencies.
