Thailand’s Finance Ministry has decided to take over the loan associated with the Rice Pledging Scheme started by Thailand’s former Prime Minister Yingluck Shinawatra from Bank for Agriculture and Agricultural Cooperatives (BAAC)
The action was taken to make the BAAC’s balance sheet more flexible for the purpose of business expansion. If the Finance Ministry take debt from rice pledging scheme off, the BAAC’s balance sheet will allow the farm bank to be worry free over huge debts.
An inspection of 17 million tones of rice, 2.35 million tones were of standard quality and considered Grade A rice. 13 million of rice was categorized as Grade B as the grains did not passed the quality test but quality could be improved for sale. About 700,000 tonnes of rice had gone bad, while another 67,000 tonnes did not match with types detailed on registration records, so they were classified as Grade C. The inspection was done by a team working for PM’s Office Minister ML Panadda Diskul.
This would be a similar act when the finance ministry took the Financial Institutions Development Fund debt of 1.4 trillion baht after 1997 financial breakdown.
Sources said that the government is legally trying to use the earning from the Rice pledging Scheme to pay principal and interest in addition to the government budget set each fiscal year.
If the Finance Ministry take over the debt than it is also possible that interest cost will be lower down as finance ministry has better rating than BAAC.
It will be impossible for the government to pay off the debt within a short time period, as this would constrain public investment, meaning it is obliged to structure the debt as a long-term loan to match revenue from the rice sales and the budget.
The ministry may also take over other state enterprise debt from previous government policies, the source said.