Fiscal incentives may reward farmers bypassing Thai government’s debt suspension plan

An anonymous source from the Finance Ministry revealed that farmers who opt out of the government’s planned debt suspension programme may be rewarded with incentives. This policy is reminiscent of one enacted during the Thaksin Shinawatra administration and is designed to encourage fiscal discipline among farmers.

Previously, in the period between 2001 and 2004, the Thaksin regime introduced a three-year debt suspension programme for individual farmers with debts up to 100,000 baht. This programme also provided incentives, such as a reduced interest rate of 3%, for farmers who chose not to participate. Interestingly, the numbers showed that almost half of the farmers, 49%, chose not to enrol, while 51% did.

The present government anticipates the debt suspension programme will be applicable to approximately four million small-scale farmers and three million small and medium-sized enterprises (SMEs). The relief is planned to be available for three years for small farmers and one year for SMEs.

The ministry chose not to disclose the specific details of the debt suspension’s scope and limit as these will largely depend on the government’s financial responsibility concerning interest payments to state financial institutions. However, it is known that the Thaksin administration set the ceiling for debt suspension at 100,000 baht per person, which was later raised to 500,000 baht per person during the Yingluck Shinawatra administration from 2011 to 2014.

One key difference between the previous programmes and the current one is that the Srettha Thavisin administration’s programme allows participating farmers to secure additional loans from the Bank for Agriculture and Agricultural Cooperatives to invest in their farming activities. These loans will be granted based on the farmers’ potential to generate income for debt repayment, reported Bangkok Post.

Under the Thaksin government, which aimed to reform the farm economy to make it more sustainable, debt relief was granted to 2.25 million farmfort of 15.5 billion baht to cover interest payments. Meanwhile, the Yingluck administration provided debt relief to 775,000 farmers, which represented a total debt of 90.5 billion baht.

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