Government saving bonds sale below target

[Thaivisa News]

Bangkok: – The Finance Ministry has conceded to the lower-than-expected subscription of government saving bonds from December to March.

The ministry issued the three-year bonds at 3.25 per cent interest rate. The bonds were designed to a secondary fiscal instrument to supplement government borrowing and to encourage the public saving.

Of the 4 billion baht target, the actual sale was 3 billion baht done through four commercial banks, Bangkok, Krung Thai, Kasikorn and Siam Commercial.

Finance officials said the weak bonds sale might be attributed to the economic doldrums resulting in lowering disposable incomes and lowering saving.

In order to boost sale of the remaining bonds, a promotion campaign would be launched.

The campaign is to enable buyers to use bonds as a gift for a third party on special occasion.

Early this year, the ministry placed 100 billion baht bonds in the markets and could manage to sell about half of the bonds.

Critics said the bond interest rate was too low and that the ministry had a wrong timing and too high a target to release bonds in the ailing economy.

They also stated that the lowering policy rate by the monetary policy committee forced the ministry borrow at concessionary rate in order to refinance the existing loans with high interest rate.

The combination of lowering policy rate and the ailing economy to absorb government bonds has posed a dilemma for the ministry to manage public debt.

In the next fiscal year, the government is obliged to repay at least three per cent of loans in order to uphold the fiscal discipline and maintain the country’s credit rating.

And the ministry is struggling to earmark the 2016 budget for loans repayment.

For the current fiscal year, the government has already failed to meet the three per cent target due to financial constraints.

[Mango Bob]

How about raising the interest rate.

[taony]

Raise the interest rate instead of wasting money on marketing. This is how it works.

[Utley]

Is that a Thai iceberg I see ahead Captain Smith?

[billphillips]

It's quite normal that the interest rate of suspect (higher risk) government bonds is substantially higher than that that of its more stable counterparts.

I think that anything less than 5% will not be causing a rush to buy.

[maidee]

not for farangs

or very difficult to be ALLOWED to put your hard cash there

with 80+% of debt, thais are not saving people anyway

[fred Kubasa]

Actually I am surprised the sales were so high and suspect exaggeration as

I can't even imagine buying Government Bonds here, at any premium !