Government plans 40-billion-baht SME relief fund using FIDF money to ease debt and boost liquidity

The government is preparing to draw around 40 billion baht from the Financial Institutions Development Fund (FIDF) to establish a new SME relief fund aimed at reducing existing debt burdens and providing low-interest loans to help struggling small and medium-sized enterprises regain liquidity.

This measure is part of Prime Minister and Interior Minister Anutin Charnvirakul’s “Quick Big Win” policy, which targets five key areas to lift the economy out of stagnation within four months. The five pillars are:

1. Stimulating the economy and tourism
2. Solving household debt, particularly non-performing loans (NPLs)
3. Supporting SMEs
4. Encouraging public savings
5. Building future industries

All measures will adhere to the government’s fiscal discipline framework of “no additional borrowing” and “no excessive stimulus that risks fiscal stability”, with a focus on long-term impact rather than short-term cash handouts.

Under the first pillar, the government has already launched the “Let’s Go Halves Plus” scheme to reduce living costs for over 20 million people, while the second pillar — household debt restructuring through asset management companies (AMCs) — is in progress and will be presented to the Cabinet on November 11.

According to a source from the Ministry of Finance, the next phase of the government’s economic agenda — the third pillar — will focus on SME assistance, which is now considered an urgent priority. The source said that SMEs are facing multiple challenges, including declining competitiveness, market pressure from Chinese imports, and the lingering effects of the COVID-19 crisis, which continue to weigh down sales and business operations.

Furthermore, many SMEs are struggling with limited access to credit, as banks have tightened lending criteria due to rising business risks and high operational costs. This has led to a continued decline in loan approvals from the banking system.

The source added that, following the launch of the AMC debt resolution scheme, the government will move immediately to implement the third economic pillar, focusing on providing liquidity and low-interest credit to SMEs. The initiative aims to help entrepreneurs reduce debt burdens, access funding more easily, and revive operations, enabling SMEs to reintegrate into the economic system and drive national recovery.

Nearly 40 billion baht from FIDF to support SMEs

Under the current model to support SMEs, funding will come from the Financial Institutions Development Fund (FIDF) — the same source used for the “You Fight, We Help” scheme.

The plan involves allocating part of the FIDF’s resources to create a “central pool”, by diverting half of the 0.46% annual contribution that commercial banks make to the fund — or 0.23% — into this new mechanism. The money would be used to revive struggling SMEs and finance urgent economic recovery programmes.

Each year, financial institutions contribute around 80 billion baht to the FIDF. If half of that amount were redirected — as done under the You Fight, We Help project — approximately 39 billion baht could be used for this SME support initiative. Officials argue this approach would be viable because it does not use taxpayers’ money and would not affect the government’s public debt ceiling.

However, concerns remain. The FIDF’s original purpose is to repay debts incurred from rescuing financial institutions during the 1997 Asian Financial Crisis. Using this money for other purposes could extend the repayment timeline, as the Bank of Thailand (BOT) had expected the FIDF’s debts to be cleared within six years. Diverting funds could prolong repayment to as long as 10 years.

Two options are currently under discussion:

1. Redirecting half of banks’ annual contributions (0.23%) from the FIDF — one part to continue debt repayment, and the other to fund SME support programmes.
2. Establishing a government-managed central fund to assist SMEs while maintaining oversight on fiscal discipline.

This SME assistance plan is not seen as a short-term relief effort but as a “critical bridge” to sustain Thailand’s grassroots economy. SMEs employ more than 70% of the Thai workforce and contribute over 35% of GDP. A wave of SME failures could trigger a wider economic downturn.

Therefore, support for SMEs must go beyond providing liquidity — it must also address structural debt problems. The government aims to link liquidity restoration with debt restructuring, helping viable SMEs remain in business, avoid default, and ultimately drive long-term economic growth.