Thai govt to set up asset management firm to tackle household debt
Thailand Prime Minister Srettha Thavisin today announced that an asset management firm is to be established by the Thai government in the first quarter of the year to address the persistent issue of high household debt. The initiative confronts numerous challenges, including the reluctance of some creditors to participate in the process.
With 90.9% of its GDP equalling household debt at the end of the fiscal year on September 30, 2023, Thailand boasts one of the highest such ratios in the region. Lower-income families, unable to secure bank loans, frequently resort to illegal loan sharks, resulting in a debt trap with steep interest rates for many.
The Government Savings Bank will establish an asset management firm, which will primarily tackle chronic debts, according to the Thai prime minister. The Bangkok-born politician did not provide further information. Another official noted that the new entity will implement more lenient regulations in debt management.
The government has previously introduced measures such as interest rate reductions and debt suspensions to manage the country’s household debt, valued at 16 trillion baht (US$446 billion), reported Bangkok Post.
The 61 year old Thai prime minister identifies the debt issue as a significant barrier to bolstering Southeast Asia’s second-largest economy, which his administration is attempting to rejuvenate with substantial stimulus and initiatives to enhance its crucial tourism sector.
In related news, Thailand’s economy faces a recession amid soaring household debt, prompting calls for banks to cut interest rates. PM Srettha urged the central bank to reduce rates, emphasising the economy’s crisis. However, Bank of Thailand Governor Sethaput Suthiwartnarueput defended the current rate as neutral.
The Government of Thailand revised its 2024 growth forecast from 3.2% to 2.8% due to weakened exports and tourism. Thailand Deputy Finance Minister Julapun Amornvivat also outlined plans to issue overseas bonds and sell government savings bonds worth 100 billion baht in fiscal year 2024.
