Monday, September 28, 2020

Govt readies fresh Bt200-bn relief package

Mar 27. 2020
Deputy Prime Minister Somkid Jatusripitak, right and Finance Minister Uttama Savanayana.
Deputy Prime Minister Somkid Jatusripitak, right and Finance Minister Uttama Savanayana.
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By The Nation

The government plans to launch another relief package worth at least Bt200 billion in response to the Covid-19 pandemic, Deputy Prime Minister Somkid Jatusripitak said on Friday (March 27).

Veerathai Santiprabhob, governor of the Bank of Thailand, meanwhile offered assurance that the closing of bond funds can be contained after four were shut.

Somkid said he had asked Finance Minister Uttama Savanayana to prepare to issue an emergency decree authorising the borrowing of at least Bt200 billion.

The announcement came after Somkid met with Uttama, Veerathai and other senior officials and bankers to discuss additional relief to offset the virus’ impact.

The pandemic is expected to enter its third stage in Thailand soon, represented by far great numbers of local transmissions. 

The government has already launched two relief packages.

The central bank has predicted that economic growth would contract by 5.3 per cent this year, roughly half the amount seen in 1997 at the beginning of the Asian financial crisis.

However, the virus’ impact is expected to be greater, affecting people in all walks of life rather than just the banking sector, property firms and corporations, Somkid said.

The Finance Ministry will use the money borrowed to support every corner of society.

The International Monetary Fund allows member-countries to borrow substantial amounts to deal with the virus fallout, he said.

The money will also be used to restructure the economy so that Thailand is less dependent on exports, Somkid said. The government and private companies such as PTT have to help boost small businesses.

Uttama said the third relief package will be used to help all affected people and the overall economy.

Veerathai said the closure of four bond mutual funds will be go no further as the remaining 60 bond mutual funds remain solid and are backed up by the central bank’s credit facility. The four bond mutual funds managed by TMBAM Eastspring invested largely in foreign assets, while the rest invest in local assets, he said, referring to investors’ rush to redeem their investment units, leading to the closure of the four funds.

To prevent rising bad debt in the banking sector, the central bank has relaxed its loan reserve requirements to help banks implement debt restructuring with borrowers.

The central bank also issued guidelines for banks on debt suspension, lower interest and extending debt repayment periods for individual debtors, Veerathai said.

Securities and Exchange Commission general secretary Ruenvadee Suwanmongkol added that investors who hold units in the 60 surviving bond mutual funds should not worry because those funds largely invest in government bonds and investment-grade local corporate bonds. 

Their investments are protected by central bank’s lending facility, which is designed to support the bond market.

Meanwhile, Predee Daochai, president of the Thai Bankers’ Association, said that, in the interest of curbing the virus outbreak, people should send their complaints to banks online and not seek counter service.

He said commercial banks are ready to offer loans under the Government Savings Bank-supported Bt150 billion loans programme, which charges small and mid-sized businesses low interest rates. The loans are partially guaranteed by Thai Credit Guarantee Corp.

Thailand has joined a global effort to cushion the impact of the virus. Germany has launched an $800 billion (Bt26 trillion) package and the US $2.2 trillion, and Japan’s financial assistance to support business totals 1.6 trillion yen.

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