Thai farmers debt reduction approved

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Thai farmers debt reduction approved 
Bangkok Post: 8 Apr 2010
Farmers' debt scheme gets cabinet nod
50% reduction offered on total of B80bn owed

The cabinet has endorsed a new debt restructuring scheme for 510,000 farmers who will be offered a 50% reduction on the 80 billion baht they owe and a waiver on interest charges.

A mid-year budget of 1.14 billion baht was approved yesterday to allow the scheme to get under way this year with training and personnel.

A further 2.2 billion baht will be allocated next year and 2.53 billion baht the following year to finance it.

Much of the money will go towards identifying the people eligible for the restructuring programme and to organising career redevelopment training for them.

About 2,000 temporary staff will be employed to handle the work, said Deputy Prime Minister Sanan Kachornprasart, who chairs an ad-hoc committee set up to oversee the scheme.

The 510,000 farm debtors owe a combined 80.4 billion baht.

A total of 5 million rai of farmland has been signed over as surety for the loans which have now become bad debts.

The first batch of about 80,000 farmers should be able to sign debt-restructuring contracts with state banks which have been assigned to implement the scheme within six months, Maj-Gen Sanan said.

The 80,000 debtors were all members of the Farmers' Rehabilitation and Development Fund (FRDF). The others who are not members of the fund can enter the debt restructuring scheme later.

Of the non-FRDF members, 350,000 had borrowed from state banks and financial institutions while the rest had debts with privately-run institutions.

Each of the debtors will receive a 50% reduction on their principal. The interest will be waived.

To become eligible, each farmer had to guarantee to repay their restructured debt within 15 years, the maximum repayment period. If they failed to do so, they would then have to pay the full original amount plus interest.

Each applicant could not owe more than 2.5 million baht.

Commercial banks were expected to join the debt restructuring programme if it proved successful, said Khunying Supatra Masdit, an adviser to the prime minister who sits on the Sanan-led committee.

Kanok Wongtrangan, an adviser to Prime Minister Abhisit Vejjajiva, said the scheme was not intended to clear the debts completely.

http://www.bangkokpost.com/news/local/35743/farmers-debt-scheme-gets-cabinet-nod