Debt moratorium for small businesses not to go beyond October, says governor

[webfact]

Debt moratorium for small businesses not to go beyond October, says governor

By The Nation

 

Bank of Thailand governor Veerathai Santiprabhob and other central bank executives meet with financial analysts on Tuesday to share their views on the latest economic situation.

 

The central bank will not extend the debt moratorium programme which ends in October and will instead focus on debt restructuring to help small businesses cope with the Covid-19 fallout, Bank of Thailand (BOT) governor Veerathai Santiprabhob said on Tuesday (July 14).

 

This programme was created to help SMEs survive the Covid-19 crisis, but it may damage the credit culture in the long run and lead to financial instability, he said. 

 

“Several financial support schemes will expire in October. We don’t think most SMEs will fall off the cliff, because banks have provided them with more support than the central bank has done, by suspending debt repayment by as much as a year,” Veerathai said. 

 

The important task now is that banks closely follow their debtors and implement appropriate measures for targeted groups, he said. 

 

As for the Bt500-billion soft loan for commercial banks, he said, Bt103 billion in loans has been approved so far. 

 

“Though we are far behind the target, we can extend our support period,” he said. 

 

He also said that BOT is considering banks' proposal that the Thai Credit Guarantee Corporation provide loan guarantees for more than two years.  

 

Looking ahead, he added, the most important thing is to restructure debts that are consistent with each company’s cash flow and BOT will finely tune regulations to make debt restructuring more effective. 

 

Mathee Supapongse, deputy BOT governor, said the central bank is studying bonds’ yield curve control as central banks in some countries have imposed yield curve control measures. BOT is also studying to see what impact low interest rates will have on financial institutions, savers, banks and financial system, though he said it is unlikely that the key policy rate will drop to zero per cent from the current historic low of 0.5 per cent. 

 

The central bank is also urging local gold traders to trade in dollars instead of the baht in order to reduce the impact on the Thai currency’s exchange rate, he added. 

 

Don Nakhontab, senior director at the central bank, expressed concerns about the severe impact the outbreak has had on the economy, which has prompted the central bank to project an 8.1 per cent contraction in growth. 

 

Also, only about 8 million tourists are expected to arrive this year, down from 40 million last year. Tourism is not expected to recover until the end of next year, assuming a vaccine is available by then. He said the economy has bottomed out in the second quarter, but if the debt default becomes more globally widespread and there is a second wave of infections, then the contraction in the following quarters will be even deeper. 

 

Unemployment rose rapidly in May, as 300,000 people were laid off and applied with the social security fund for assistance, he said, adding that it will become very difficult for new graduates to find employment.

 

Source: https://www.nationthailand.com/business/30391308

 

-- © Copyright The Nation Thailand 2020-07-15

 

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[leosurin]

Well...what I did understood ..banks need cash....october start restructuring debts....Thais need to pay back....can't low the intrest rate less then 0.5....bath will keep strong...Thais loose jobs,can't pay back....repossessions start...less export coz strong bath....more unemployment....I see a descended spiral ..

Where did they come out with 8 mil turists figure...?!

[hotchilli]

November: New normal, start paying your debts... 

[Jack Cook]

Economics are confusing enough at the ebst of time. Mix in Face a bit of Graft with Thai logic and you got nothing.

[BritManToo]

8 hours ago, webfact said:

The central bank is also urging local gold traders to trade in dollars instead of the baht in order to reduce the impact on the Thai currency’s exchange rate, he added. 

Can't have the Baht sinking, can we.

[robblok]

14 minutes ago, BritManToo said:

Can't have the Baht sinking, can we.

I think you are misunderstanding this... its the trade in gold that pumps up the baht. 

[BritManToo]

5 minutes ago, robblok said:

I think you are misunderstanding this... its the trade in gold that pumps up the baht. 

Surely

Selling gold puts more Baht into circulation, and the more Baht there is, the less it is worth.

[robblok]

Just now, BritManToo said:

Surely

Selling gold puts more Baht into circulation, and the more Baht there is, the less it is worth.

Selling gold exporting and wanting Baht for it means there is a demand for the Baht. The more the Baht is in demand the more its worth. Surely you understand that. 

 

Exports pump up a currency imports lower a currency. Right now its all about gold export and paid in Baht. 

 

Just think about it.

 

 

[BritManToo]

3 minutes ago, robblok said:

Selling gold exporting and wanting Baht for it means there is a demand for the Baht. The more the Baht is in demand the more its worth. Surely you understand that. 

Exports pump up a currency imports lower a currency. Right now its all about gold export and paid in Baht. 

Just think about it.

I don't think about gold much, something I just don't care about, you may be right.

But you've never struck me as a guy that knows how to make money.

So I tend to doubt your opinion.

Edited July 15, 2020 by BritManToo

[robblok]

Just now, BritManToo said:

I don't think about gold much, something I just don't care about.

Its not a shame to admit you were wrong. But i guess its a bridge to far for you. 

[BritManToo]

Just now, robblok said:

Its not a shame to admit you were wrong. But i guess its a bridge to far for you. 

Expanded my post.

[robblok]

9 minutes ago, BritManToo said:

I don't think about gold much, something I just don't care about, you may be right.

But you've never struck me as a guy that knows how to make money.

So I tend to doubt your opinion.

You can doubt all you want your just not as bright as i thought you were. 

 

https://www.investopedia.com/ask/answers/041515/how-does-balance-trade-impact-currency-exchange-rates.asp#:~:text=If a country exports more,the currency appreciates in value.&text=Trade influences the demand for currency%2C which helps drive currency prices.