Finance Ministry aims to cut household debt to 80% of GDP for economic stabilty

Deputy Finance Minister Krisada Chinavicharana said on Sunday that the household debt situation was critical, amounting to about 16 trillion baht, which is equivalent to about 90% of the GDP. Of this, about 10% can be categorised as “bad debt”.

The ministry’s target to reduce household debt to 80% of the GDP comes with a comprehensive approach focused on debt relief for borrowers, particularly those linked to state financial institutions. The goal is to help them come out of credit blacklists and regain their financial footing.

To deal with this, the Government Savings Bank (GSB) has been tasked with launching a household debt relief project by setting up an Asset Management Corporation (AMC). This corporation’s primary role will be to oversee the handling of bad household debts originating from state financial institutions. In the future, private commercial banks can also transfer their non-performing debts to the AMC.

“Improving the structure of household debts will likely benefit financial institutions as these bad debts are fully reserved by financial institutions. Therefore, any debt recovered after restructuring will translate into profits for the financial sector,” Krisada said.

In a bid to facilitate debt restructuring, GSB has been instructed to introduce a user-friendly menu-based system. This system will offer borrowers a range of options, including debt reduction and extending repayment periods.

The Finance Ministry, meanwhile, has also instructed the National Saving Fund (NSF) to integrate the 8 million informal workers who are not registered in the social security system and do not have a retirement savings plan. The minister has instructed NSF to enrol at least 6 million of them into the NSF system by next year.

Thailand has some 18 million informal workers, of whom only 10 million are registered under the social security plan.