BANGKOK, 13 September 2011– The Ministry of Finance is ready to allocate a total of 80 billion THB to village funds nationwide next year in an effort to tackle the problem of informal debts.
Finance Minister Thirachai Phuvanatnaranubala disclosed that he had instructed the Fiscal Policy Office to convene with related agencies in search for measures to address the informal debt problem in the country. As one of the measures, he announced that the Ministry had set aside a budget of 80 billion THB to be disbursed to village funds across the country at the rate of 1 million THB each at the beginning of next year.
The main objective of the village fund is to serve as the place where informal debtors can seek loans in order to pay off their debts, which in turn helps transfer the due amounts into the formal system.
According to Mr Thirachai, the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives will initially be responsible for the 1-million-THB payment to each village fund. The Finance Ministry will reimburse the banks for the expenses later on; however, as it is still unknown how long the repayment process will take, the Ministry will also be paying interests during the period.
In addition, the Finance Minister pointed out that no conditions had been set as to how much each debtor could borrow from the village fund. Nonetheless, he stressed the need for the given loans to be spent wisely in parallel with an effort to build a career and generate income in order to stamp out debt problems in a sustainable manner.