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Help is on the way: 100 billion baht stimulus package passed

Greeley Pulitzer

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Help is on the way: 100 billion baht stimulus package passed | The Thaiger
PHOTO: Finance Minister Uttama Savanayana - Thai PBS World
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Eyeing the effects of the coronavirus outbreak on the nation’s already battered economy, the government yesterday approved a stimulus package, anticipated to cost more than 100 billion baht.

The package was approved in a meeting of the Council of Economic Ministers, led by Prime Minister Prayut Chan-o-cha, and will be forwarded to the cabinet for approval on Tuesday.

After the meeting, Prayut said the package, lasting two months, will be “temporary assistance.” It includes a wide range of measures such as financial aid for small-and-medium-sized enterprises (SMEs), tax benefits and other financial policies.

The massive package comes as Thailand’s economy, already in the doldrums for several years due to weakening exports, low investment and more recently, the strengthening baht, is slumping further. The coronavirus outbreak is rubbing salt in the wound, directly hitting the tourism sector, long considered the only lifeline for the beleaguered economy.

Deputy Prime Minister Somkid Jatusripitak admits that the virus has dealt a severe blow to tourism as well as the manufacturing and services sectors.

“The Bank of Thailand has been working with other relevant agencies to roll out the first set of measures to different groups. It is particularly important to help SMEs to prevent further impacts on workers. This is the first set of measures, and there will be more later.”

Finance Minister Uttama Savanayana says the package includes cash handouts, soft loans and other financial assistance, as well as tax benefits, to help both entrepreneurs and the public.

“It’s a temporary, broad-based package to help various sectors.”

For businesses, the package provides soft loans at a 2% interest rate, a debt moratorium and delayed debt repayment, debt restructuring for non-performing loans, lower utility expenses and other costs.

To expedite soft loans, the Government Savings Bank will lend funds to commercial banks at 0.01%, so commercial banks can give loans at 2%.

In addition to this, the package will cover a 2,000-baht handout to low-income earners, farmers and freelance workers at 1,000 baht over two consecutive months.

Bank of Thailand governor, Veerathai Santiprabhob, says the central bank has issued a memo calling on commercial banks to ease debt restructuring criteria under the relief package. The central bank has also called on commercial banks to lower the minimum payment limit for credit card holders to 5% from the 10% ceiling.

Kobsak Pootrakool, secretary to the economic cabinet, says the ministers are also prepared to roll out measures to help airlines and retailers who rent airport space.

He says ministers estimate that the effect of the coronavirus outbreak will last for another six months, and an additional three months will be needed to restore public confidence.

He adds that the economy’s performance in the first quarter will not be positive, as the outbreak has alread slashed the number of foreign arrivals by 50%.

Economic growth stood at 2.4% last year, the weakest in five years, and growth this year is likely to be much lower. Kasikorn Research Centre predicts GDP expansion of just 0.5% mainly because of the outbreak.

SOURCE: Bangkok Post

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Economy

BOT predicts 5.3% contraction in Thai economy for 2020

The Thaiger

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BOT predicts 5.3% contraction in Thai economy for 2020 | The Thaiger

Even the Thai economy, which was still maintaining respectable growth before January, is now spluttering under the siege of the Covid-19 virus.

Now the Bank of Thailand has crunched some numbers and believes the Thai economy will sharply contract by 5.3% this year as the virus continues to weigh on global financial markets, the local economy and people. GDP growth for 2019 stood at a low 2.4%.

The BOT Monetary Policy Committee speculates that the Thai economy will contract 5.3% for 2020 before hopefully rebounding with 3% growth next year.

Don Nakornthab, senior director at Bank of Thailand’s economic & policy department, says the Banks’s Monetary Policy Committee has voted to maintain benchmark rate at 0.75%.

“The coronavirus outbreak has been impacting Thai tourism and exports to a large extent. The number of tourist arrivals was expected to contract by 60% this year while the economies of our trading partners would slow down or enter into recession if the Covid-19 pandemic persists for a prolonged period.”

“Government stimulus packages, businesses and people’s adaptations to the situation hold the key to the direction of the local economy.”

SOURCE: The Nation

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Economy

The almighty baht set to fall further despite rate cuts, stimulus

Greeley Pulitzer

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The almighty baht set to fall further despite rate cuts, stimulus | The Thaiger
PHOTO: Chiang Rai Times

A lot has changed for the baht.

It was only months ago that The Bank of Thailand considered drastic measures to rein in the rambunctious baht, whose massive gains in currency markets made it the darling of speculators. In December Kasikorn Bank released a report outlining reasons the baht “will remain strong into 2020.” The bank’s research arm forecast the baht would move in a range of 30.1 – 30.5 baht to the US$ for the next few quarters at least. (As of today exchange rate is 32.83 US$ to 1 baht) They warned then that Thailand’s November export data would likely to be in negative territory, another victim of the “continuing strength of the local currency.”

Those days are gone, and the baht now looks to tumble further after the BoT cut interest rates to counter the impact of the Covid-19 coronavirus. The decisions came in a hail of announcements starting with an emergency rate cut on Friday night. The new measures are a further blow for the baht, which has already slipped over 9% this year, more than erasing last year’s gains. There’s also slowing economic growth and the worst drought in decades. And a delay in the government’s budget due to political wrangling didn’t help matters.

Friday’s move cut rates by 25 basis points to a new record low of 0.75%. It was the second reduction in as many months, coming ahead of today’s scheduled policy meeting. The policy committee has said the virus outbreak is likely to be “more severe” than previously thought and it will “take time for the situation to normalize.”

Only two weeks ago the government announced a massive stimulus package, well beyond its earlier Chim Shop Chai (Eat Shop Spend) programs, to “return growth to positive territory.” Policymakers went before the media, saying they’ll set up a mechanism to allow banks to use money market and bond funds for collateral to enhance liquidity and make funds available for companies to refinance corporate bonds.

The coronavirus has already taken its toll on Thailand’s newly-struggling currency, decimating the nation’s tourism industry, largely by reducing visitors from China, who alone accounted for some 3% of the country’s gross domestic product. Tourism revenue has slumped 43% in February from a year earlier. Furthermore exports tumbled 4.5% the same month, according to a Bloomberg report.

The BoT’s benchmark rate is now just a fraction above the level of inflation, putting Thailand on the cliff of joining the list of nations with negative real policy rates.

“The odds of a recession over the next 12 months have jumped to 30% from just 10% a year ago. Across Asia, only Japan has a higher probability”, according to Bloomberg surveys of economists.

While the number of virus cases in Thailand remains well below those in the world’s worst-affected countries, the recent spike suggests there’s potential for the situation to get a lot worse, meaning even more bad news for the baht. Yesterday there was an announcement of a state of emergency and the Cabinet’s approval of a 117 billion baht stimulus package.

SOURCE: Chiang Rai Times

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Coronavirus (Covid-19)

7 key service required by all Thai banks during ‘disruption’

Anukul

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7 key service required by all Thai banks during ‘disruption’ | The Thaiger
FILE PHOTO: The Straits Times

The Bank of Thailand is demanding all Thai financial institutions to continue providing 7 basic financial services, including money withdrawals, fund transfers, deposits, payments, cash management and settlement systems, in an effort to avoid potential Covid-19 related disruption.

Secretary-general of the Thai Bankers Association, Kobsak Duangdee, says after the conference call between all banks and the central bank, they’ve all come to an agreement…

“The central bank is requiring banks to rehearse internal operations so-called business continuity plans (BCPs), for several scenarios related to virus outbreak disruptions. Banks need to ensure that mobile banking will be available in an emergency. And as for branching services, they need to ensure hygienic and sanitation systems to contain the spread.”

Mr Kobsak say, the government’s soft loan measures through the Government Savings Bank up to 150 billion baht will help boost customers’ financial liquidity.

GH Bank president Chatchai Sirilai says “the seven services are considered crucial services that banks must continue operating and the bank’s BCP comprises three parts…

  • First, splitting staff at headquarters into at least two teams and shifts to ensure available employees if one team is infected
  • Second, allowing some employees at headquarters to work from home to reduce congestion.
  • Third, the bank will move its backup facilities online in case of a lockdown of headquarters to ensure that financial services remain available

Bangkok Bank executive chairman Deja Tulananda says “the bank has stepped up measures under the BCP and the bank has prepared readiness for business operations.”

Moreover, the central bank is letting banks offer additional financial assistance to customers affected by the outbreak to ease their financial burden on a case-by-case basis. Banks are offering debt restructuring to both individual and commercial clients, including a ‘grace period’ of extending the period of electricity payments for specific businesses such as hotels and housing, interest rate cuts and also debt payment rescheduling. Read more about the power and water bill concessions HERE

SOURCE: Bangkok Post

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