Thailand will lend farmers and their children a combined 11 billion baht ($345 million) in an effort to fight off loan sharks as high levels of household debt drag on economic recovery, a state bank said on Tuesday. The plan is part of measures by the ruling junta, the National Council for Peace and Order, to revive Southeast Asia's second-largest economy, which was hurt by months of political unrest. The army took power on May 22.
The central bank and the state planning agency have indicated household debt levels this year were as high as 82.3 percent of gross domestic product, up from 75.5 percent in the first quarter of 2013, said Somsak Kangteerawat, senior executive vice president of the Bank of Agriculture and Agricultural Co-operatives (BAAC). "Therefore, the BAAC has come up with this scheme to tackle household debts, which are not in the main financial system," he told reporters, adding that loan sharks charged interest rates ranging from 36 percent to 60 percent per year.
The government will deploy sustainable measures through the ministry of finance to battle loan sharks, army spokesman Yongyuth Mayalarp said. "The head of NCPO would like concrete actions to solve illegal loans issues and provide assistance to those in need," Yongyuth told reporters, referring to the newly-appointed prime minister Prayuth Chan-ocha, the head of the junta. The finance ministry will work with other financial institutions, such as the BAAC and the Government Saving Bank, he added. The BAAC has initially earmarked 10 billion ($313 million)for farmers - each can borrow 100,000 baht ($3,100) with an annual interest rate of 12 percent and a 10-year debt repayment period, Somsak said, adding that the step would benefit 150,000 farmers.
