Finance Ministry confident debt moratorium to help boost GDP to 8%

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BANGKOK, 26 April 2012  – The Finance Ministry is confident that the state-initiated debt moratorium for good borrowers will significantly help boost Thai GDP in 2012. 

Deputy Finance Minister Tanusak Lekuthai said that the Cabinet’s approval of the 45-billion-baht debt suspension program for good borrowers with debts of no more than 500,000 baht is expected to help boost Thai economic growth by one percent. Accordingly, the 2012 GDP can end up at 8 percent.

Under the recently-approved program, eligible borrowers can choose whether or not they will suspend principal payments while still having their interest rates reduced by 3 percent per year.

Mr. Tanusak stated that with the suspension of around 400-500 billion baht of outstanding debts, domestic consumer spending and business expenses will increase and generate more cash circulation.

The Deputy Finance Minister went on to say that the increase of interest rate reduction from 2 to 3 percent will not likely add more burden to participating state banks, as the government will be compensating 1.5 percent of reduced interest to them.

He added that the government may consider raising the debt ceiling from 500,000 baht to 1 million baht in the near future.