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Finance Ministry eases concern on household debts

Sep 04. 2019
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The Finance Ministry on Wednesday (September 9) moved to ease public concern on high household debt in the first quarter of the year.

Lavaron Sangsnit, director-general of the Fiscal Policy Office and the ministry's spokesperson, said the level of household debt in the first three months was still lower than the peak in 2015 when it accounted for 81.2 per cent of the gross domestic product (GDP).

The ministry said it has yet to become a pressing issue as most of the borrowings were backed by collateral and that they should be deemed as part of the process in building up one's wealth or as investment to generate income.

Total household debt as of the end of the first quarter stood at Bt12.97 trillion or 78.7 per cent of GDP, of which 42.8 per cent were loans from commercial banks. Most of the loans were backed with assets of the borrowers, for the purpose of acquiring assets such as properties and vehicles or used as operating expenses of their businesses. 

When excluding loans for businesses, total household debt in the first quarter would have fallen to Bt10.84 trillion or 65.8 per cent of GDP, Lavan said.

At the same time, the level of loans for personal consumption or personal loan remained low at 6.3 per cent of the total debt while non-performing loans among households accounted for just 3.3 per cent in the quarter. 

The office, he said, will continue to monitor the situation.

Earlier this week, the National Economic and Social Development Council (NESDC) and the Bank of Thailand both raised concern on the high level of household debt.

According to the NESDC, total household debt nationwide in the first quarter amounted to Bt13 trillion, rising by 6.3 per cent year-on-year and accounting for 78.7 per cent of GDP – the highest since the first quarter of 2017.

The state think-tank warned that household debt has been rising continuously since mid-2017, adding that the debt level would likely be higher in the second quarter, given the 9.2 per cent increase in personal loans from commercial banks during the period.

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