The government should set clear rules on retiring debt from the losses incurred by the rice-pledging scheme to prevent an accrual of long-term liabilities, says the Public Debt Management Office (PDMO).
The debt-clearing method or "fiscal rules" must be applied to the rice-pledging debt to avoid a crisis on the order of 1997, when the 1.4-trillion-baht debt from 54 bankrupt financial institutions became a public burden that remains to be cleared.
PDMO deputy director-general Theeraj Athanavanich said the government must use major sources of revenue to repay liabilities stemming from the rice-pledging scheme.
Major revenue sources include sales of rice from state stockpiles, which currently contain an estimated 15 million tonnes of milled rice.
The Finance Ministry reported that as of last Sept 30, losses from 15 rice-pledging schemes carried out by previous governments had reached 699 billion baht, with 536 billion incurred under the Yingluck Shinawatra government.
Clear rules could ensure fiscal responsibility by the next government, Mr Theeraj said.
He said the previous government used an inefficient method to repay the residual 1.14 trillion baht in debt of the Financial Institutions Development Fund (FIDF) set up in the aftermath of the 1997 economic crisis.
In 2012, the Yingluck government required all banks to set aside 0.46% of their deposit base to help repay FIDF interest.
The amount of revenue collected from the banks was inadequate, however, as only 93.9 billion baht was delivered to pay down FIDF interest over two years, leaving the present principal at 1.07 trillion.
This year all banks, both commercial and state-backed, are expected to contribute 52.3 billion baht.
At this pace, the Bank of Thailand estimates that repayment of the remaining 1.07 trillion baht could take as long as 22 years.
The principal of the FIDF is covered by profits of the central bank, whose operations remain in the red with high accumulated losses.
The Bank of Thailand is expected to run profitably and begin contributions to the FIDF by 2018.
Other sources of revenue to cut debt include gains from the sale of FIDF assets from 2015-17, a scheme projected to rake in a combined 59 billion baht.