Additional Bt70 Billion Borrowing Needed For Thai Rice-Pledging Scheme

[webfact]

Additional Bt70-billion borrowing needed for rice-pledging scheme: TDRI

Suphannee Pootpisut

The Nation

BANGKOK: -- The Finance Ministry plans to ask the government to allow additional borrowing of Bt70 billion to support the rice-pledging scheme, according to the Thailand Development Research Institute.

Nipon Poapongsakorn, a distinguished TDRI scholar, said yesterday that the ministry sent a letter to the government explaining that it needs another Bt70 billion for the rice-pledging scheme. He urged the government to reveal full details of the scheme.

"This letter's main objective is to dispose of rice from the inventory. If there's a mistake, there must be someone responsible. The Finance Ministry points out that now there is not enough money for the scheme due to the cap on the credit guarantee ratio. The [rice-pledging] scheme's credit guarantees alone account for 60 per cent of total credit guarantees," he said.

The Cabinet has already approved credit guarantees of Bt150 billion for the rice-pledging scheme in the 2012/13 production year. Of this amount, about Bt50 billion has been used for the unfinished second rice-pledging scheme for the 2011/12 production year. The remaining guarantees will be used for the main crops' rice-pledging scheme and may not be sufficient if the harvest is bigger than expected.

Nipon said the Ministry of Finance (MOF) apparently was seeking a way to give Bt70 billion more in credit guarantees to the Bank for Agriculture and Agricultural Cooperatives (BAAC). The Public Debt Management Office has to find funds for this purpose.

The amount may be allocated from credit guarantees earmarked for other state enterprises that do not need to borrow. This additional amount together with the BAAC's budget is believed to be for the pledging of the main crop. However, there remain some difficulties for the second crop.

If the BAAC takes on debt, which can be up to 20 times its registered capital, the government has to pay the interest or compensate the BAAC for the cost of servicing the debt.

"The BAAC is smart enough to separate its accounts even if borrowing without an MOF guarantee will be made. But if the rice-pledging scheme goes on while rice cannot be sold or can be sold only at unreasonable prices, the government will see more accrued losses, which will become public debt," Nipon said. Although the government would be able to sell rice, no one knows which stock would be sold and at what price, he said.

The government has not disclosed details of the rice-pledging scheme to others, including the BAAC, he said.

Ammar Siamwalla, another distinguished TDRI scholar, said normally the poor would be badly affected by such a scheme.

If everyone follows the real market mechanism, then the scheme reflects the first time that the rice market mechanism has been totally destroyed, as this government is monopolising the whole system from purchase to sales, he said.

Price forecasts for rice or other crops would be practical for no more than one and a half years, while this scheme projects prices for the next three to four years, he said.

The memorandum of understanding for government-to-government rice sales is only a preliminary agreement and not a firm commitment, he added.

-- The Nation 2012-11- 23

[Ricardo]

Is there perhaps some minor cashflow-problem, with the many claimed government-to-government rice-sales, due perhaps to their being conditional or completely illusionary ? Surely not !

The taxpaying public deserve to be told, except that they won't be, because it's all commercially confidential.

Yay for truth and transparent-government !

[FOODLOVER]

Open the books, the real books.

[sirchai]

Price forecasts for rice or other crops would be practical for no more than one and a half years, while this scheme projects prices for the next three to four years, he said.

The memorandum of understanding for government-to-government rice sales is only a preliminary agreement and not a firm commitment, he added.

I wish my father in law would understand that....

[Moruya]

Plunderers of the people

[asiawatcher]

How much proof does anyone require to show the stupidity of this scam? Get the censure motion in place, a no confidence and impeachment and get these idiots out if it is not too late already. Have they not stripped enough already from the tax payers (including me)?

[rubl]

Lots of people upcountry like the scheme because they have (marginally) more income. The higher level economic aspects are lost on them. Next time they'll vote Pheu Thai again. If next a Democrats led government would be formed to clean up the mess, it's the Democrats fault of course. That's politics.

[rogerdee123]

Perhaps the Thaksin strategy is ....

plunge the country into hopeless debt (while profiting personally as much as possible) ..

take on the image of being victimized when the Govt is eventually ousted after they succeed bankrupting the treasury (tying the hands of the new incoming Govt) ..

when the new (Democrat led?) Govt takes over, organize the red shirts to protest because the new bankrupt Govt must cut budgets and services ....

[Pib]

The rice pledging scheme is great except for a couple of problems: all the borrowing to keep the scheme funded, finding new places to hide store the rice the govt can't sell, etc.

[TackyToo]

I heard of a guy in Dubai who loves this country so much that he may help out with some cash from his coffers…

[LuckyLew]

These people are truely pathetic

They will not be happy until they have plundered and pilfered

so much that the country goes in a USA or EuroZone style crisis

How much money do these people need to pilfer before they

say enough is enough?

[McMagus]

Love him or hate him he is a clever little thing. Either way the Govt. can't lose...but try as I might I just can't get it through to the missus how stupid this system is and that it really is only the big players who are benefiting, let alone the scams and rip-offs. All they see is a little bit more Baht in their pockets. This whole ploy has been so easy to set up and sell because of the increasing income disparity in Thailand over recent years. All political parties have had their noses in the pig swill and the little Somchais and Noi never even get close. What will be interesting is that now that Thaksin has 'awoken' the masses, if PT doesn't really deliver, will they be able to control their new found voice. Thaksin is as much an elite as the Amaat. Thailand has no-one to blame but itself for this disastrous public purse scam. The Thais have consistently refused to stand up and be counted and demand transparency in governance and rule of law. As soon as the proverbial hits the fan they turn to the palace or a coup to solve their problems. Thailand will survive I have no doubts but it is the loss of potential that is really ruining this country.

[Skywalker69]

How long will this money last?

[SICHONSTEVE]

These people are truely pathetic

They will not be happy until they have plundered and pilfered

so much that the country goes in a USA or EuroZone style crisis

How much money do these people need to pilfer before they

say enough is enough?

It has reached 'disgraceful' proportions now - 'so-called' democracy does not give the government the right to bankrupt the country to save these incompetent idiots from losing face!!!

[fstarbkk]

Lots of people upcountry like the scheme because they have (marginally) more income. The higher level economic aspects are lost on them. Next time they'll vote Pheu Thai again. If next a Democrats led government would be formed to clean up the mess, it's the Democrats fault of course. That's politics.

I'm starting to think that the Democrats should avoid getting back into power at all costs, until this has all played itself out.

[Pimay1]

These people are truely pathetic

They will not be happy until they have plundered and pilfered

so much that the country goes in a USA or EuroZone style crisis

How much money do these people need to pilfer before they

say enough is enough?

It has reached 'disgraceful' proportions now - 'so-called' democracy does not give the government the right to bankrupt the country to save these incompetent idiots from losing face!!!

I suspect the pigges at the trough didn't realize the increase in the price of the new Benz, BMW and pink Bentleys and just found it out. Thus the demand for the increase of funds.

[Rancid]

Hmmm, maybe this rally of the alternate pilferers has pannicked the government to try and grab as much as they can as quickly as they can. A few billion stashed away helps take the pain out of an army coup. Mind you if there is a coup then I suppose it is back to enormous military budgets with associated kickbacks and stealing land from the peasants that aren't yet gunned down. When you think about it the Thais have pretty miserable options.

There again in the US you had Obama for Wall St or Romney for Wall St and the peasants be buggered, most of the west is just as bad. At least in the old days the politicians at least had the decency to try to hide their theft, larcency and fraud, these days they juste really couldn't be bothered.

[Soupdragon]

Is that 475,000,000,000 Baht for the current round of pledging. That equates to 15,062 Baht every second for a year.

I wonder if the average rice farmer can actually contemplate these numbers.

[vijer]

On a side note.

Most small farmers are loosing their land because the government still expects them to pay taxes even when they have bad years. About 40% of farmed land is owned by the farmers, the other 60% is owned by rich people who have taken advantage of the farmers plight. The farmers then have to rent the land from the new owners to grow the rice. The new owners have raised the rent, only because they heard the farmers were getting a higher price from the government. So again the farmer looses.

I doubt the people behind this SCHEME (do the Thai's really understand the negative connotations of this word) really care a rats behind if the farmers benefit from the SCHEME. The rice pledging SCHEME was intended to dupe the uneducated farmer into voting Taksin and then pad the pockets of the rich land owners.

The rice pledging SCHEME is working perfectly, that is it is working as the schemers intended, to help the greedy not to help the poor.

[asiawatcher]

How long will this money last?

To spend 1BN USD in 1 year, you need to spend close to 30M per day every day give or take some change. At that rate he has about 4+years if he could physically spend that fast. There is no chance in his life time that will occur. Funds on deposit at 1% p.a. (there are far better rates out there but not for large players) means he would be getting 10M p.a. in interest per billion meaning at 4BN at bank he would be getting USD110,000 per day. Nice. That should cover lunch and the hookers. Given that he's now investing in precious metals in Africa etc, plus other business interests, you could bet he would still be okay...

[1bbcd5]

Think I may be in love with this.