New emergency loan to tackle new wave, maintain country’s fluidity

[webfact]

 

By Tanakorn Sangiam

   

BANGKOK (NNT) - The government has detailed that the new set of emergency loans will help Thailand maintain its financial fluidity in dealing with the unstable COVID-19 situation, while upholding the national and general public’s interests.

 

The government passed a new Emergency Decree permitting the Ministry of Finance to seek an additional 500 billion baht loan to tackle the spread of COVID-19 and solve economic and social issues.

 

Deputy Prime Minister and Minister of Energy Supattanapong Punmeechaow, said today this new emergency loan will complement previous ones last year, giving the government the necessary funding to tackle future outbreaks and emergencies, as well as taking care of the public in this time of crisis.

 

The Energy Minister said he hoped no actual disbursement from this amount would be necessary, but the government cannot be incautious about the situation.

 

He said the government has been working at full tilt, calling on the public to comply with health and safety measures.

 

The government last year passed three Emergency Decrees authorizing the Ministry of Finance to take 1.9 trillion baht in loans to offer financial aid to people and businesses affected by COVID-19, and to stimulate the economy.

 

With this year’s new wave starting in April, the government has offered a 350 billion baht portion of the last year’s loan as soft loans and financial rehabilitation measures, while setting aside 400 billion baht to maintain the stability of the country’s monetary system, and the security of the national economy.

 

This remaining amount, plus the new 500 billion baht loan, will mean the government has 1.25 trillion baht in funding on hand.

 

Mr Supattanapong said he expects this wave of COVID-19 to be contained within the second quarter this year, urging all sides to help in stopping the spread as the country proceeds with the vaccine rollout.

 

He said there are no serious concerns related to the investment sector, as the country has seen 100 more foreign investment projects in Q1 2021 compared to Q1 2020, with the gross value of projects seeking investment promotion, having grown by 80%.

 

-- © Copyright NNT 2021-05-26

 

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[daveAustin]

Let's hope it's not used to tackle the emergency buying of a submarine. 

[RichardColeman]

25 minutes ago, webfact said:

Mr Supattanapong said he expects this wave of COVID-19 to be contained within the second quarter this year

Now I know this story is complete and utter bull.

[sammieuk1]

Still no sign of the massive foreign currency reserves propping the baht up then ????

[mtls2005]

"Fluidity"?

 

(Liquidity)

 

3 hours ago, webfact said:

He said the government has been working at full tilt

 

 

"Full tilt"

 

Ah yes, from the elephant dueling days, a whopping 1 Km/hr.

 

 

 

[Fex Bluse]

2 hours ago, sammieuk1 said:

Still no sign of the massive foreign currency reserves propping the baht up then ????

There used to be a guy in the forums who would go out of his way to shill for Thailand, explaining in great detail why the government was ultra wealthy and had amongst the highest reserves in the world. 

 

Wonder where all those guys are now? 

 

So quiet. 

 

Between no farangs coming, the THAI airways fiasco, the fact that the Thais are now forced to admit tourism is a MUCH larger part of the Thai economy, and the rampant corruption, they seem to be broke. 

[Excel]

3 hours ago, sammieuk1 said:

Still no sign of the massive foreign currency reserves propping the baht up then ????

Much has gone already I suspect and despite what the chest puffers sprout here it has happened previously in other countries as corrupt as Thailand.

[itsari]

5 hours ago, sammieuk1 said:

Still no sign of the massive foreign currency reserves propping the baht up then ????

Good question . Yet all the time they can raise money elsewhere the dollar reserves will remain in place. It will be interesting how things turn out in the near future .

[hotchilli]

7 hours ago, webfact said:

He said the government has been working at full tilt, calling on the public to comply with health and safety measures.

The Titanic went full tilt ... that didn't end too well.

Does Thailand have a lifeboat plan I wonder... only enough for half?

[Enzian]

The term used in Western media is liquidity, not fluidity, though there are certainly a lot of fluids as well as liquids sloshing around in the politics of this country. What they describe seems to be analogous to a "line of credit". 

I would like to see the value of the baht become more realistic so I will have reason to convert my FCD account from dollars to baht; but this US administration seems as hell bent as the previous one to weakening the value of the dollar, so it's a race to the bottom for both of these. While the Euro inexplicably gets stronger.

[Cake Monster]

8 hours ago, webfact said:

This remaining amount, plus the new 500 billion baht loan, will mean the government has 1.25 trillion baht in funding on hand.

Maybe I am wrong, but ....

1) I thought the Gov,t only had 300 Billion left from the previous Tranches of borrowed money.

2) The new loan was to be for 700 Billion, or is this another 500 Billion on top of that 700 Billion.

Something wrong with the Math here.

[whaleboneman]

4 hours ago, Fex Bluse said:

There used to be a guy in the forums who would go out of his way to shill for Thailand, explaining in great detail why the government was ultra wealthy and had amongst the highest reserves in the world. 

 

Wonder where all those guys are now? 

 

So quiet. 

 

Between no farangs coming, the THAI airways fiasco, the fact that the Thais are now forced to admit tourism is a MUCH larger part of the Thai economy, and the rampant corruption, they seem to be broke. 

The country is probably broke but "they" are surely getting wealthier by the minute.

[Dogmatix]

There has been a complete lack of clarity about the government plans to do with this money and what is happening with other large and unproductive government expenditure plans, e.g. the subs and THAI. 

 

THAI is a very visible example of lack of transparency.  The THAI creditors mysteriously passed the rehab plan which is explicitly contingent on government financial support after the finance ministry publicly refused to put in B50bn.  THAI is already technically insolvent with massive debts and minus B250bn shareholders funds on its balance sheet, now losing B140bn a year.  There was no mention of how foreign creditors voted at the meeting, despie the fact they owned the majority of the debt.  Has the government quietly bought up much of the foreign debt, I wonder.   It is obvious that THAI needs a bare minimum of B250bn to survive and could easily chew through B500bn.  No one is publically acknowledging this.  Whatever they are planning to do about T?HAI is not being shared with the public.  Clearly the best use of taxpayers' funds would be to simply over compensation to the Thai cooperatives and retirement funds etc that hold THAI baht denominated debentures and let the rest go tits up.  The coops etc are a fairly small part of the bebt and is not secured against assets.  Most of foreign creditors, if they have not been bought out already are leasing companies which issenior debt secured against aircraft which they can sell to get something back, even if only scrap value in the current market.  So anyway, how much are they going to sink into THAI in total and where is it going to come from?

 

In fact where is any of the money going to come from?  Borrowing from overseas is not an easy option at the moment.  The appetitie for Thai debt overseas has declined, as evidenced by the portfolio outflows in the balance of payments. Borrowing in the local market to boost the economy is a zero sum game.  Apart from foreign portfolio outflows the current account and alance of payments have suffered terrible damage from the demise of foreign tourism, choking off the foreign component of money supply.  Banks loan to deposit ratios have soared since last year, indicating a shortage of liquidity in the local market.  So, if the government issue large batches of baht treasury bonds at attractive rates, the cash will be sucked out of bank accounts, creating tighter liquidity and pushing interest rates up which would damage the economic recovery.    

Edited May 26, 2021 by Dogmatix