Thai Cabinet agrees to borrow B270 bln to support govt measures and projects

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The Cabinet on Tuesday gave an approval to Finance Ministry’s plan to borrow about 270 billion baht to support the state enterprises and to finance government’s initiatives to stimulate the economy.

Finance Minister Korn Chatikavanij told the press that an estimate of 200 billion baht will be short-term loans, up to the period of three years, from domestic commercial banks and state financial institutions to help the state enterprises which need funds for their projects or to refinance existing loans.

The other 70 billion baht, he said, will be sought from international institutions, such as the World Bank (WB), the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA), for up to 10 years of repaymnent period at the interest rates between 2.38-3.70 percent per annum, which would still be much lower that the loans from domestic financial institutions.

The loans of up to 70 billion baht will be used for the activities of state-controlled financial institutions in order to support government stimulus measures, especially as loans to exporters, small and medium businesses and real estate sector, and to finance government’s infrastructure projects, mainly aimed at increasing the country’s competitiveness and productivity during the next three years.

Korn however said the government’s plan to borrow 200 billion baht in short-term loans will not increase the country’s public debt since the loans would be used for refinancing debts incurred by state enterprises and from four major domestic banks — Bangkok Bank, Krung Thai Bank, Siam Commercial Bank and Kasikorn Bank.

Meanwhile, Pongpanu Svetarundra, director-general of the Finance Ministry’s Public Debt Management Office (PDMO), revealed that Thailand’s public debt now stands at about 3.4 trillion baht, which is equivalent to about 37 percent of the country’s gross domestic product (GDP).

He said the public debt at the end of the current fiscal year on September 30, 2009, is estimated to rise to 3.9 trillion baht following the planned loans, which would still be lower than 41 percent of the country’s GDP.

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