FIDF Debt Of Bt1.14 Trillion To Be Cleared In 24 Years: Bank Of Thailand

[webfact]

FIDF

FIDF to be cleared in 24 years: Prasarn

Seetalavajit Sabayjai

The Nation

BANGKOK: -- Bank of Thailand Governor Prasarn Trairatvorakul sets the preliminary goal to clear the Financial Institutions Development Fund's Bt1.14 trillion debt within 24 years.

While the surcharges, supported by the executive decree which won the Constitution Court’s clearance on Wednesday, would raise billions, the central bank’s other revenue would help clear the debt.

At the press conference on Wednesday, Prasarn envisioned that the repayment period may be faster than that. Once the debt burden accounts for a smaller portion of GDP, say 10 years from now, the concerned authorities at the time may decide to clear the debt in one lump sum payment.

Prasarn said that the rush now (through higher surcharges) is immpossible as it will affect many parties.

From a deposit base of about Bt10 trillion, the extra fee of 0.07 per cent would raise about Bt7 billion per annum.

The governor said that regulations involving the surcharge collection would be announced before the collection takes place in the second half. Banks will pay additional surcharges on their deposit base, covering all deposits, bills of exchange and short-term bonds.

"If the surcharges can raise a higher amount than expected, we can lower them later," he said, adding the review will take place in three years.

While expressing worries about the competitiveness of commercial banks against their regional peers through the higher cost, he said banks are now comfortable with the additional fee though this will slightly push up their costs.

-- The Nation 2012-02-24

[David48]

Just to this in perspective ...

The interest payments on a 1.14 Trillion Baht debt are as follows.

Interest........Interest

..Rate........Payments

.....4%.....B 45,600,000

.....5%.....B 57,000,000

.....6%.....B 64,400,000

.....7%.....B 79,800,000

And that is just paying the interest on the loan!

If, as the article says, the government wants to pay back the actual money (not just pay the interest) ...

1.14 TRILLION Baht divided by 24 (years) = B 47,500,000 per year.

So EVERY year for the next 24 years ... that is almost a generation, the Thai people will be slugged with a loan repayment of, at say 6% interest, of B 68,400,000 + B 47,500,000.

A yearly repayment of 115,900,000 Baht ... One Hundred and Fifteen Million, Nine hundred Thousand Baht.

EVERY year for the next 24 years.

So the Government is living on the credit card ... understand this.

What are they promising? A flood free Thailand. Is it possible ... a resounding NO.

Do they need to do something about this major problem (flooding) ... a resounding YES.

Whose money are they spending ... the future generations.

It's not fiscal management ... it's a fiscal pregnancy ... and the debt is being born to the future generation.

Remember ... you work, you save and you spend.

It's a closed loop system.

This government is spending more then they earn.

Can they afford to do this ... the flood mitigation program ... absoloutly.

Does Thailand desperately need this ... again ... absolutely.

Can they afford to pay for it ... along with their popularist policies ... NOOOOOOOOOOO

Ditch the rice price pledging scheme, same with the wage increases and the generous cut to the corporate tax rate.

How is the debt (at the moment) going to be paid ... by you.

By increased Bank Charges via increasing the surcharge on bank deposits.

David48

OH ... If I have not understood the implications of this or my figures are wrong ... please correct me.

[whybother]

Just to this in perspective ...

The interest payments on a 1.14 Trillion Baht debt are as follows.

Interest........Interest

..Rate........Payments

.....4%.....B 45,600,000

.....5%.....B 57,000,000

.....6%.....B 64,400,000

.....7%.....B 79,800,000

And that is just paying the interest on the loan!

If, as the article says, the government wants to pay back the actual money (not just pay the interest) ...

1.14 TRILLION Baht divided by 24 (years) = B 47,500,000 per year.

So EVERY year for the next 24 years ... that is almost a generation, the Thai people will be slugged with a loan repayment of, at say 6% interest, of B 68,400,000 + B 47,500,000.

A yearly repayment of 115,900,000 Baht ... One Hundred and Fifteen Million, Nine hundred Thousand Baht.

EVERY year for the next 24 years.

<snip>

David48

OH ... If I have not understood the implications of this or my figures are wrong ... please correct me.

The interest on the principal will reduce each year that the principal is paid off.

But I'm not going to recalculate it for you ... sorry.

[Pib]

Let's check back in about 24 years to hear the govt announcement that the FIDF debt will be paid off in another 24 years.

[David48]

Oh ... and maybe it's been lost in translation but the quote is

From a deposit base of about Bt10 trillion, the extra fee of 0.07 per cent would raise about Bt7 billion per annum.

0.07 % of Bt10 trillion is Bt 7,000,000 !

0.70 % of Bt10 trillion is Bt 70,000,000

Where is that gnarly Klingon now when I need someone to check my numbers!

Naam ... where are you?

[David48]

The interest on the principal will reduce each year that the principal is paid off.

But I'm not going to recalculate it for you ... sorry.

Spot on! Too angry to consider that.

Nice pick up My bad

[Reasonableman]

That's great news, since most of those responsible for the debacle should be dead by then. Shame for the younger generation, though. Higher taxes for sure, and for nothing, just to pay off history, not to develop the country and give Thais a better standard of living. Getting near time to stage a Greek Crisis and massive writeoff, or should we just incur more debt? Thailand is too big to fail... right?

[Reasonableman]

From another thread:

"According to the premier, about Bt2.4 trillion will be needed for state spending in fiscal 2013, which is about Bt20 billion more than is being spent in the current fiscal year. Yingluck explained that the government needed to borrow in order to compensate for the Bt300-billion budget deficit, adding that even though there were many on-going development projects, there was still a need to tighten the belt. She then went on to say that funds should only be requested for necessary projects."

I hope that makes sense to you.

[whybother]

Oh ... and maybe it's been lost in translation but the quote is

From a deposit base of about Bt10 trillion, the extra fee of 0.07 per cent would raise about Bt7 billion per annum.

0.07 % of Bt10 trillion is Bt 7,000,000 !

0.70 % of Bt10 trillion is Bt 70,000,000

Where is that gnarly Klingon now when I need someone to check my numbers!

Naam ... where are you?

10,000,000,000,000 x 1.00% = 100,000,000,000

10,000,000,000,000 x 0.70% = 70,000,000,000

10,000,000,000,000 x 0.07% = 7,000,000,000

I think ...

[otherstuff1957]

This is what 1.14 Trillion looks like in numbers:

1,140,000,000,000

The current total annual government budget is 2.38 trillion baht:

2,380,000,000,000

It looks as though they are following the Greek economic model.

[cloudhopper]

And another country condemns its next generation to be debt slaves to the international banks...

[rubl]

...

If, as the article says, the government wants to pay back the actual money (not just pay the interest) ...

1.14 TRILLION Baht divided by 24 (years) = B 47,500,000 per year.

...

1.14 trillion = 1,140,000,000,000 I think, which would be 24 x 47,000,000,000

Mind you, seldomly I work with so many zeroes

[Reasonableman]

...

If, as the article says, the government wants to pay back the actual money (not just pay the interest) ...

1.14 TRILLION Baht divided by 24 (years) = B 47,500,000 per year.

...

1.14 trillion = 1,140,000,000,000 I think, which would be 24 x 47,000,000,000

Mind you, seldomly I work with so many zeroes

We also have zero experts, if you need them.

[rubl]

...

If, as the article says, the government wants to pay back the actual money (not just pay the interest) ...

1.14 TRILLION Baht divided by 24 (years) = B 47,500,000 per year.

...

1.14 trillion = 1,140,000,000,000 I think, which would be 24 x 47,000,000,000

Mind you, seldomly I work with so many zeroes

We also have zero experts, if you need them.

On my own again I guess, and the world looked so bright and shiny when I woke up this morning

[Orac]

Just to this in perspective ...

The interest payments on a 1.14 Trillion Baht debt are as follows.

Interest........Interest

..Rate........Payments

.....4%.....B 45,600,000

.....5%.....B 57,000,000

.....6%.....B 64,400,000

.....7%.....B 79,800,000

snip ......

So EVERY year for the next 24 years ... that is almost a generation, the Thai people will be slugged with a loan repayment of, at say 6% interest, of B 68,400,000 + B 47,500,000.

snip ...

The problem is you are making up the figures - why on earth should they be paying at 6 %.

When FIDF bonds were initially issued they didn't hit 6 %

http://www.bot.or.th/English/FinancialMarkets/DebtSecuritiesAuction/AuctionResult/Pages/FIDFBondsResult2544.aspx

And current bonds issued by BOT have been around 3 % from what I can see:

http://www.bot.or.th/English/FinancialMarkets/DebtSecuritiesAuction/AuctionResult/Pages/BOTBondsResult2555.aspx

I am sure there are some financial gurus out there that can maybe clarify this.

[Reasonableman]

Just to this in perspective ...

The interest payments on a 1.14 Trillion Baht debt are as follows.

Interest........Interest

..Rate........Payments

.....4%.....B 45,600,000

.....5%.....B 57,000,000

.....6%.....B 64,400,000

.....7%.....B 79,800,000

snip ......

So EVERY year for the next 24 years ... that is almost a generation, the Thai people will be slugged with a loan repayment of, at say 6% interest, of B 68,400,000 + B 47,500,000.

snip ...

The problem is you are making up the figures - why on earth should they be paying at 6 %.

When FIDF bonds were initially issued they didn't hit 6 %

http://www.bot.or.th...Result2544.aspx

And current bonds issued by BOT have been around 3 % from what I can see:

http://www.bot.or.th...Result2555.aspx

I am sure there are some financial gurus out there that can maybe clarify this.

Let's hope we have an expert accountant/economist in the house. I suspect that interest rates would rise as your credit rating with lenders fell. With an outstanding debt of roughly half the annual budget (please correct if wrong), it isn't looking all that great. Anyway, whatever the interest rate, just repayment of the principal without interest looks like a formidable task.

Edited February 24, 2012 by Reasonableman

[animatic]

HIgher taxes to pay off the 'new borrowing' this slight of hand transfer will allow,

but the real damage is the HIDDEN TAXES coming through every bank depositors fees.

The government will levee a fee on all Thailand banks, and does anyone, for one moment,

imagine they will not pass this cost on to customers?

[David48]

1 thousand .................1,000 10³

1 million ...............1,000,000 10⁶

1 billion .........1,000,000,000 10⁹

1 trillion . 1,000,000,000,000 10¹²

Well done guys Reasonableman and rubl ... my emotion clouded my logic (rare for me)

Plus thanks for not flaming me.

I'll just go and find a dark corner and hide there for a while and hope that gnarly Klingon doesn't read this post and lose more face!

[Reasonableman]

For those who may have forgotten, or never knew:

The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support it's fixed exchange rate), cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial over-extension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.

Source: Wiki

[Orac]

HIgher taxes to pay off the 'new borrowing' this slight of hand transfer will allow,

but the real damage is the HIDDEN TAXES coming through every bank depositors fees.

The government will levee a fee on all Thailand banks, and does anyone, for one moment,

imagine they will not pass this cost on to customers?

Unfortunately this is an issue with the banking system the world over where banks shareholders and bondholders have been protected at the expense of taxpayers and the banks own customers.

[David48]

Interest........Interest

..Rate........Payments

.....4%.....B 45,600,000

.....5%.....B 57,000,000

.....6%.....B 64,400,000

.....7%.....B 79,800,000

The problem is you are making up the figures - why on earth should they be paying at 6 %.

When FIDF bonds were initially issued they didn't hit 6 %

http://www.bot.or.th...Result2544.aspx

And current bonds issued by BOT have been around 3 % from what I can see:

http://www.bot.or.th...Result2555.aspx

I am sure there are some financial gurus out there that can maybe clarify this.

In my defence ... I did give a range of Interest rates from 4% up 7%

Off now to find that dark corner ...

[lungmi]

For those who may have forgotten, or never knew:

The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support it's fixed exchange rate), cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial over-extension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.

Source: Wiki

And one winner was Chavalit.....

[Orac]

Though I am uneasy about the whole issue of this debt being transferred to the BOT, the reality is the the debt has only been moved and still exist but, in its new home, there will maybe be some responsibility taken to actually deal with it rather than ignoring as seems to have been done before.

[rubl]

From the BoT side on FIDF history

http://www.bot.or.th...es/History.aspx

"FIDF is a separated juristic entity from the Bank of Thailand. The Fund Management Department of Bank of Thailand carry on the operations of FIDF and provide administrative staffs. FIDF keep its own accounting records and budget. The Auditing General Office audit FIDF and report the audit result to the Minister of Finance and inform BOT.

FIDF is managed by the Fund Management Committee, comprising of the governor of BOT as a chairman, the Permanent Secretary of Finance Ministry as Deputy Chairman, and not more than 9 committee members appointed by the Minister of Finance. Recently, there are 9 committee members comprising of 3 BOT representatives, 3 Ministry of Finance representatives, 1 from the Attorney General office and 1 from the state of Council Office. The assistant governor of Fund Management Group, BOT, is a committee, secretary of FIDF's committee and the manager of FIDF."

and roles and responsabilities

http://www.bot.or.th...sibilities.aspx

" In case that FIDF has to borrow money to avert the crisis under the approved plan or measure, BOT may lend to FIDF or the government may guarantee FIDF's debt whichever the cases may be. Regarding the assistance under the scheme, FIDF must prepare a separate account from normal business. The government will have to absorb the cost of assistances, if any, to FIDF."

Edited February 24, 2012 by rubl

[Reasonableman]

From the BoT side on FIDF history

http://www.bot.or.th...es/History.aspx

"FIDF is a separated juristic entity from the Bank of Thailand. The Fund Management Department of Bank of Thailand carry on the operations of FIDF and provide administrative staffs. FIDF keep its own accounting records and budget. The Auditing General Office audit FIDF and report the audit result to the Minister of Finance and inform BOT.

FIDF is managed by the Fund Management Committee, comprising of the governor of BOT as a chairman, the Permanent Secretary of Finance Ministry as Deputy Chairman, and not more than 9 committee members appointed by the Minister of Finance. Recently, there are 9 committee members comprising of 3 BOT representatives, 3 Ministry of Finance representatives, 1 from the Attorney General office and 1 from the state of Council Office. The assistant governor of Fund Management Group, BOT, is a committee, secretary of FIDF's committee and the manager of FIDF."

and roles and responsabilities

http://www.bot.or.th...sibilities.aspx

" In case that FIDF has to borrow money to avert the crisis under the approved plan or measure, BOT may lend to FIDF or the government may guarantee FIDF's debt whichever the cases may be. Regarding the assistance under the scheme, FIDF must prepare a separate account from normal business. The government will have to absorb the cost of assistances, if any, to FIDF."

Is there a plain-English version? Or can someone interpret what this means, and its significance?

[animatic]

For those who may have forgotten, or never knew:

The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support it's fixed exchange rate), cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial over-extension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.

Source: Wiki

And one winner was Chavalit.....

With Deputy PM Thaksin standing one meter behind him.

The Thaksin who MADE money on the devaluation, while most others went belly up.

Insider Trading.... he'd be doing 20 years in Danbury for what he did, if he did that in USA.

And Thaksin has said the cost of the bail out of the IMF loan, for the debacle he helped start,

was paid off by himself permanently. Well that is the EXACT same loan shift he did then,

that they are shifting 10 years later. Double secret hidden debts.

Edited February 24, 2012 by animatic

[Valentine]

For those who may have forgotten, or never knew:

The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support it's fixed exchange rate), cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial over-extension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.

Source: Wiki

And one winner was Chavalit.....

I am sure there were some who profited handsomely by buying US$ at 25 Baht just before the currency floated. In fact I wonder if that is why they used all their reserves to shore up the Baht in order to give them more time to buy US$. This could be pure speculation but if true it would be fraud of gigantic proportions.

[Moruya]

Just to this in perspective ...

The interest payments on a 1.14 Trillion Baht debt are as follows.

Interest........Interest

..Rate........Payments

.....4%.....B 45,600,000

.....5%.....B 57,000,000

.....6%.....B 64,400,000

.....7%.....B 79,800,000

And that is just paying the interest on the loan!

If, as the article says, the government wants to pay back the actual money (not just pay the interest) ...

1.14 TRILLION Baht divided by 24 (years) = B 47,500,000 per year.

So EVERY year for the next 24 years ... that is almost a generation, the Thai people will be slugged with a loan repayment of, at say 6% interest, of B 68,400,000 + B 47,500,000.

A yearly repayment of 115,900,000 Baht ... One Hundred and Fifteen Million, Nine hundred Thousand Baht.

EVERY year for the next 24 years.

So the Government is living on the credit card ... understand this.

What are they promising? A flood free Thailand. Is it possible ... a resounding NO.

Do they need to do something about this major problem (flooding) ... a resounding YES.

Whose money are they spending ... the future generations.

It's not fiscal management ... it's a fiscal pregnancy ... and the debt is being born to the future generation.

Remember ... you work, you save and you spend.

It's a closed loop system.

This government is spending more then they earn.

Can they afford to do this ... the flood mitigation program ... absoloutly.

Does Thailand desperately need this ... again ... absolutely.

Can they afford to pay for it ... along with their popularist policies ... NOOOOOOOOOOO

Ditch the rice price pledging scheme, same with the wage increases and the generous cut to the corporate tax rate.

How is the debt (at the moment) going to be paid ... by you.

By increased Bank Charges via increasing the surcharge on bank deposits.

David48

OH ... If I have not understood the implications of this or my figures are wrong ... please correct me.

You've a few noughts missing.

7% of 1.14T is around 80 billion

[rubl]

From the BoT side on FIDF history

http://www.bot.or.th...es/History.aspx

"FIDF is a separated juristic entity from the Bank of Thailand. The Fund Management Department of Bank of Thailand carry on the operations of FIDF and provide administrative staffs. FIDF keep its own accounting records and budget. The Auditing General Office audit FIDF and report the audit result to the Minister of Finance and inform BOT.

FIDF is managed by the Fund Management Committee, comprising of the governor of BOT as a chairman, the Permanent Secretary of Finance Ministry as Deputy Chairman, and not more than 9 committee members appointed by the Minister of Finance. Recently, there are 9 committee members comprising of 3 BOT representatives, 3 Ministry of Finance representatives, 1 from the Attorney General office and 1 from the state of Council Office. The assistant governor of Fund Management Group, BOT, is a committee, secretary of FIDF's committee and the manager of FIDF."

and roles and responsabilities

http://www.bot.or.th...sibilities.aspx

" In case that FIDF has to borrow money to avert the crisis under the approved plan or measure, BOT may lend to FIDF or the government may guarantee FIDF's debt whichever the cases may be. Regarding the assistance under the scheme, FIDF must prepare a separate account from normal business. The government will have to absorb the cost of assistances, if any, to FIDF."

Is there a plain-English version? Or can someone interpret what this means, and its significance?

Plain English? Reminds me of dr. Weir in the movie Event Horizon. EXplaining his FTL drive he first said "In layman's terms, you use a rotating magnetic field to focus a narrow beam of gravitons; these in turn fold space-time consistent with Weyl tensor dynamics until the space-time curvature becomes infinitely large and you have a singularity..." prompting the reply "&lt;removed&gt; laymen's terms, what about English"

[bigbamboo]

That's Numberwang!