Rice loan: Crisis of confidence

[webfact]

RICE LOAN
Crisis of confidence
Suphannee Pootpisut,
Petchanet Pratruangkrai
The Nation



BANGKOK: -- BAAC halts "rice loan" after run on GSB; customers of GSB "upset at move" and "fear it could lose liquidity"; government vows to get money for farmers in 6-8 weeks

The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) yesterday put the brakes on borrowing from the Government Savings Bank (GSB) to pay for the rice-pledging scheme until the Finance Ministry clarifies the legality of such loans.

The move came after savers flocked to withdraw deposits from GSB across the country, especially in the South, which is a stronghold of the opposition Democrat Party.

In a separate incident, the embattled government was put under more pressure when thousands of farmers marched from the Commerce Ministry and other sites to the Office of the Permanent Secretary for Defence in Muang Thong Thani, demanding a meeting with caretaker Prime Minister Yingluck Shinawatra.

Finance Minister Kittiratt Na-Ranong met the farmers several hours later instead of Yingluck, who failed to show up. However, he was greeted by nothing but boos and angry farmers threw objects and yelled at him as the minister, guarded by military police, retreated quickly.

Earlier, Kittiratt said the government would continue to seek loans for the BAAC so it could have money to pay for farmers within two months from yesterday. "The BAAC should be able to pay about Bt4 billion a day to farmers for an overdue payment of Bt110 billion," he said.

GSB customers reportedly wanted to show they were not happy with the bank lending to the BAAC, believing that the loan would be used for the rice-subsidy scheme. Others were said to lack confidence in the GSB's liquidity, fearing that it may dry up if it provides loans to the flagship project, which still owes a huge sum to farmers.

The GSB was believed to have lent Bt5 billion to the BAAC recently, as part of a total credit line of up to Bt20 billion.

BAAC president Lak Vajananavat said yesterday that the bank would not withdraw any money from the Bt5-billion loan, borrowed as the first batch from a lender to pay farmers under the rice scheme. And it would not borrow an additional Bt15 billion in remaining credit. No action would be until the bank gets an "all clear" from the Finance Ministry on whether it should go ahead on this matter.

"The outcome of discussion between the ministry and the bank should be delivered in two days," said Lak said.

However, the BAAC president acknowledged that the bank's borrowing was guaranteed by the Finance Ministry and considered a bridge-financing loan in line with minutes of the Cabinet meeting on January 21, which allowed the ministry to borrow Bt130 billion for a period of 30 days or 45 days.

After that, the Finance Ministry would secure another loan to repay the bridge-financing loan.

"If there are any technical problems on such borrowing, this is a duty of the Finance Ministry to clarify. The BAAC's duty is to pay those who are under the rice project," Lak said.

The BAAC chief said the bank had received more money than expected from the Commerce Ministry after it sped up sales of rice from the state stockpile. The bank received about Bt10 billion in January and Bt6.3 billion this month.

"In September, the bank expects to receive Bt95 billion sent from the Commerce Ministry," Lak said.

Meanwhile, the caretaker government insisted yesterday that it would be able to pay overdue debts worth Bt110 billion to every farmer within six to eight weeks, after the Finance Ministry seeks funds for the BAAC.

The farmers tussled with soldiers guarding the Office of the Permanent Secretary for Defence and a few people on both sides sustained minor injuries from the barbed wire. Eventually, both sides gave up and agreed to have a lunch break.

Protest leader Rawee Rungrueng then asked farmers through loud speakers to return to their main protest site outside the Commerce Ministry and return tomorrow, despite an initial agreement that they would all camp out at the office.

With Yingluck not showing up, the farmers eventually ended up meeting with senior government officials behind closed doors in the afternoon.

Rawee, who went to the meeting, did not speak publicly about what they discussed. Later, Kittiratt said in an interview that the government had no reason not to pay farmers the subsidy and that all those holding a pledging receipt would be paid.

Interbank lending

_ This is usually a loan one bank gives another, typically for about 30 days but occasionally up to 1 year;

_ The interest rate for this type of loan is typically higher than the

general lending rates;

_ This kind of loan is usually aimed at stabilising the borrowing bank's liquidity.

-- The Nation 2014-02-18

[Robby nz]

BANGKOK: -- BAAC halts "rice loan" after run on GSB; customers of GSB "upset at move" and "fear it could lose liquidity"; government vows to get money for farmers in 6-8 weeks

So it will be another 6 to 8 weeks now before the farmers get paid.

However, the BAAC president acknowledged that the bank's borrowing was guaranteed by the Finance Ministry and considered a bridge-financing loan in line with minutes of the Cabinet meeting on January 21, which allowed the ministry to borrow Bt130 billion for a period of 30 days or 45 days.

After that, the Finance Ministry would secure another loan to repay the bridge-financing loan.

So after 30 or 45 days they would get another loan to pay of the first loan, plus interest of course on and on into infinity........................while the interest builds up.

How to get deeper in debt in one easy lesson.

[ChrisY1]

BANGKOK: -- BAAC halts "rice loan" after run on GSB; customers of GSB "upset at move" and "fear it could lose liquidity"; government vows to get money for farmers in 6-8 weeks

So it will be another 6 to 8 weeks now before the farmers get paid.

However, the BAAC president acknowledged that the bank's borrowing was guaranteed by the Finance Ministry and considered a bridge-financing loan in line with minutes of the Cabinet meeting on January 21, which allowed the ministry to borrow Bt130 billion for a period of 30 days or 45 days.

After that, the Finance Ministry would secure another loan to repay the bridge-financing loan.

So after 30 or 45 days they would get another loan to pay of the first loan, plus interest of course on and on into infinity........................while the interest builds up.

How to get deeper in debt in one easy lesson.

This government is panicking....the rotten scheme is losing billions and yet they keep trying to get funds to maintain their voter base...at all costs......

Totally incompetent bunch of crooks!

[notmyself]

So after 30 or 45 days they would get another loan to pay of the first loan, plus interest of course on and on into infinity........................while the interest builds up.

How to get deeper in debt in one easy lesson.

Aye. It's like paying off your credit card bill with the same credit card.

The government (in caretaker mode) knows full well that the game is up and is no doubt attempting to stuff as much money into their own pockets before it goes pear shaped. No doubt they will do a runner to Dubai and claim to be the legitimate government in exile but that will take lots of money when arrest warrants are issued.

[Ricardo]

So last week's promise of 'You'll be paid next week' becomes a vow of 'in six to eight weeks'.

How can anyone expect the farmers to run their businesses, and plan their new-crop planting , when they're constantly misled or worse by their principal customer ?

Yay for Red-Finance & Cashflow !

[khwaibah]

New image YL.

[Baerboxer]

The NACC really need to get their finger out and resolve this.

If corruption is proven those responsible should be severely punished and their assets seized - regardless of who they are, which family they belong to or who their in-laws maybe. Then a mechanism for paying the farmers would need urgently implementing without the corrupt element.

If no corruption is proven then arrangements have to be made to pay the farmers quickly, efficiently and effectively - i.e. 100% going to farmers, no skim offs.

The caretaker government only seem to respond when backed into a corner and threatened. Last weeks "payment on Monday" now seems to have become in 6 to 8 weeks. No wonder no one believes a caretaker PM/DM in hiding.

[TVGerry]

From getting paid on Monday to '6-8 weeks'. Farmers are getting screwed by this lying government. It's time they did their part in pushing out the corrupt Shinawatra government too.

[soalbundy]

In 6 to 8 weeks from when?

[Nickymaster]

Why not sell some of the 20,000,000,000 kg's (yes 20 billion kg's!!) they suppose to have in stock?

[sam sen]

there was a pretty clear statement that the farmers would be paid on monday. another broken promise.

i'm surprised the farmers aren't a lot more annoyed than they are. they have been taken for chumps.

[robblok]

In 6 to 8 weeks from when?

I thought you were supporting the reds ? You are asking awfully critical questions. To be honest i think if the farmers are really really lucky they will be paid in 6 to 8 weeks from now. But as a betting man i would bet against it.

[Suriya4]

Why not sell some of the 20,000,000,000 kg's (yes 20 billion kg's!!) they suppose to have in stock?

No need to sell.

Just give back the rice to the farmers.

[Barney R]

Lol according to the deputy minister of commerce they plan to sell 10 million tonnes of rice soon LOL WHO TOO ? A fairy godmother from never never land so the coffers should be full of fake money and yes all the farmers will be paid in the land of sugar and honey .

I am neither a red or yellow shirt supporter and I read with interest the debate that is raging on TV between the two sides , it reminds me of a high profile murder trail when all the evidence is with the prosecution team (yellows) and the defence team (reds) can only defend their client by trying to discredit and intimidate their opponent but for all the smoke and mirrors the one underlying fact remains THE FARMERS WHERE MEANT TO BE PAID IN OCTOBER BEFORE THE GOVERNMENT RESIGNED AND STILL WAIT FOR PAYMENT. Sorry but blaming someone else is nothing else but fraud .

[tomyummer]

"Eventually, both sides gave up and agreed to have a lunch break."

Classic.

[soalbundy]

In 6 to 8 weeks from when?

I thought you were supporting the reds ? You are asking awfully critical questions. To be honest i think if the farmers are really really lucky they will be paid in 6 to 8 weeks from now. But as a betting man i would bet against it.

No No No, i do not support the reds or do i have any respect (nor have i ever had any for the shinawatra clan) for the government now in power nor do i fully support Suthep. I try to remain neutral while at the same time observing the failures of both sides. When all is said and done it matters not one iota what i think or say. I am not as well informed as some on this forum but i try to make up my own mind based on my experiences here in Isaan.

My opinion is that Thaksin got his support from the farmers and the poor in general because he was the only politician ever to look briefly in their direction and try to improve their lot,albeit for his own good. He even succeeded to some extent but lost his chance for true greatness in Thai history due to his unbridled greed for power and wealth. Absolute power corrupts absolutely.

Suthep is a man who by all accounts ( i have no knowledge of my own concerning this) is just as corrupt as any other politician but one must admit he has shown courage to embark on such a necessary political journey which brings him in a certain amount of danger when he could have sat back and enjoyed his position and wealth. He obviously wasn't satisfied with the status quo and set out to change things,and change things he has. Thai politics wont be the same again no matter who wins this struggle. He has brought corruption out of the dark, where it prospers most, into the light.

Farmers,at least in my neck of the woods, are seeing for the first time that all is not rosy on the good ship Thaksin and that isn't just due to the late payment of rice. I don't think that they will reject him outright now but the feeling has turned from, "he has done us all a lot of good" to "nobody cares about the farmers" He has lost his halo and that is due to Suthep. They see that the democrats way of rice subvention although not as profitable for them was at least sustainable. Farmers are not stupid,down trodden yes but not stupid and many have a natural sort of quiet dignity and a great ability to suffer quietly which has been misused and abused for hundreds of years. I think its time they had a little nibble at the cheese board.

Edited February 18, 2014 by soalbundy

[Huk]

Why not sell some of the 20,000,000,000 kg's (yes 20 billion kg's!!) they suppose to have in stock?

No need to sell.

Just give back the rice to the farmers.

That 1) requires that the rice stockpile actually exists (seems like some rice entered the system via the revolving door) and 2) that farmers will accept the rice in storage in lieu of the rice they pledged ("I did not pledge low quality rice, I pledged top quality rice").

[robblok]

In 6 to 8 weeks from when?

I thought you were supporting the reds ? You are asking awfully critical questions. To be honest i think if the farmers are really really lucky they will be paid in 6 to 8 weeks from now. But as a betting man i would bet against it.

No No No, i do not support the reds or do i have any respect (nor have i ever had any for the shinawatra clan) for the government now in power nor do i fully support Suthep. I try to remain neutral while at the same time observing the failures of both sides. When all is said and done it matters not one iota what i think or say. I am not as well informed as some on this forum but i try to make up my own mind based on my experiences here in Isaan.

My opinion is that Thaksin got his support from the farmers and the poor in general because he was the only politician ever to look briefly in their direction and try to improve their lot,albeit for his own good. He even succeeded to some extent but lost his chance for true greatness in Thai history due to his unbridled greed for power and wealth. Absolute power corrupts absolutely.

Suthep is a man who by all accounts ( i have no knowledge of my own concerning this) is just as corrupt as any other politician but one must admit he has shown courage to embark on such a necessary political journey which brings him in a certain amount of danger when he could have sat back and enjoyed his position and wealth. He obviously wasn't satisfied with the status quo and set out to change things,and change things he has. Thai politics wont be the same again no matter who wins this struggle. He has brought corruption out of the dark, where it prospers most, into the light.

Farmers,at least in my neck of the woods, are seeing for the first time that all is not rosy on the good ship Thaksin and that isn't just due to the late payment of rice. I don't think that they will reject him outright now but the feeling has turned from, "he has done us all a lot of good" to "nobody cares about the farmers" He has lost his halo and that is due to Suthep. They see that the democrats way of rice subvention although not as profitable for them was at least sustainable. Farmers are not stupid,down trodden yes but not stupid and many have a natural sort of quiet dignity and a great ability to suffer quietly which has been misused and abused for hundreds of years. I think its time they had a little nibble at the cheese board.

I have no love for Suthep either.. i think he really overplays his hand. Though i like his idea or removing the statue of limitations on corruption and if he is as corrupt as many say.. Then he could be hung by his own change.

Anyway I am just hoping that from all this more transparency and less corruption appears.

[Scamper]

" However, the BAAC president acknowledged that the bank's borrowing was guaranteed by the Finance Ministry "

That's all that's necessary for Kittirat's impeachment. A caretaker administration does not have the power to authorize or guarantee any delegation of monies. Period. But despite all this exploding yesterday, Kittirat is determined to carry on with exactly the same course of getting BAAC to receive interbank loans. He can't do that. Period. An interbank loan is - as this article rightly point out - generally issued to boost liquidity. It is not meant to be magically transformed into an act of parliament.

[Robby nz]

Reported elsewhere that the staff at Airports of Thailand Plc have been wearing black today in protest at an order from Dubai that the company transfer 40 billion of excess liquidity to the BAAC.

[Patpending]

Reported elsewhere that the staff at Airports of Thailand Plc have been wearing black today in protest at an order from Dubai that the company transfer 40 billion of excess liquidity to the BAAC.

i have looked for this, but can't see it. could you give me a clue please.

suppose there is a limit to how many people can take their money out. once they have done this,,,, then what

[bkkdave1220]

Reported elsewhere that the staff at Airports of Thailand Plc have been wearing black today in protest at an order from Dubai that the company transfer 40 billion of excess liquidity to the BAAC.

If thai staff all wear the same dress, it is because they have been told to by the boss. It's the same old thai way that holds back the country. they would not dare do this off their own bat, so we don't need to take into account any numbers there, just that they have been told... as ever, what to think and do. That they do it and don't question says more about them than the current state of affairs.

No independent thought and mob mentality Both side of the fence I hasten to add.

[notmyself]

("I did not pledge low quality rice, I pledged top quality rice").

Reminds me of a friend. She saved and saved to get herself an iPhone 4 which she looked after to an extreme even getting a pouch made from the material used to clean glasses. Months down the line and it still looked as good as the day she bought it. It broke down one day and had to be posted off for repair. The one she got back was scratched to bits and in a right state. She complained as was told that they send a replacement of about the same age.

[Robby nz]

Reported elsewhere that the staff at Airports of Thailand Plc have been wearing black today in protest at an order from Dubai that the company transfer 40 billion of excess liquidity to the BAAC.

i have looked for this, but can't see it. could you give me a clue please.

suppose there is a limit to how many people can take their money out. once they have done this,,,, then what

BP, most recent 08.07 pm

[bangon04]

there was a pretty clear statement that the farmers would be paid on monday. another broken promise.

i'm surprised the farmers aren't a lot more annoyed than they are. they have been taken for chumps.

Maybe they are really too stupid to vote....

[RubbaJohnny]

("I did not pledge low quality rice, I pledged top quality rice").

Reminds me of a friend. She saved and saved to get herself an iPhone 4 which she looked after to an extreme even getting a pouch made from the material used to clean glasses. Months down the line and it still looked as good as the day she bought it. It broke down one day and had to be posted off for repair. The one she got back was scratched to bits and in a right state. She complained as was told that they send a replacement of about the same age.

Funny same happened when I sent my wife to the hairdressers