A 50-billion-baht government bond issue was floated through the Bank for Agriculture and Agricultural Cooperatives (BAAC) on Wednesday to help cover the losses occurred from the the rice price schemes of previous governments.
Officials inspect rice stockpiled in a warehouse in Pathum Thani in July 2014. (Bangkok Post file photo)
Deputy finance permanent secretary Pongpanu Svetarundra, said it was the policy of the current government to urgently solve the debt problem incurred by the rice pledging scheme of the previous government, so the Finance Ministry, the Budget Bureau and the BAAC had agreed on a bond issue.
The BAAC is the issuer, with the capital amount plus the interest to be fully guaranteed by the government.
The first tranche of 42 billion baht will have a maturity period of three years and 10 months, at interest of 2.75% per annum. The second tranche of eight billion baht, offering 3.01% interest, will be over seven years. The bonds are offered only to financial institutions.
Accordng to Mr Pongpanu said the bond offer was warmly received by the new non-bank segment, particularly asset management firms.
Kritsda Udyanin, director-general of the Public Debt Management Office, said it is the largest single bond issue ever by a state-owned enterprise.
The proportion of non-bank firm buying into the BAAC bonds had increased from 8.7-14.2% of total subscribers to 27.3%, which indicated the confidence in the bonds, he said.
Liabilities incurred from the subsidy schemes for farm products by previous governments amount to 780 billion baht, the lion's share stemming from the rice subsidy.
Of the total of 780 billion baht, 580 billion resulted from the costly rice-pledging scheme sponsored by the Yingluck Shinawatra government and the rest from preceding governments.
The Pheu Thai government's rice subsidy, which offered a pledging price 40-50% above market prices, has cost 878 billion baht since it was unveiled in the 2011-12 main crop, with 580 billion of debt outstanding.
The rice-pledging scheme suffered a monumental setback when it failed to boost market prices as the government had promised it would.
The rice scheme is also subject to a corruption investigation. The National Anti-Corruption Commission ruled that Ms Yingluck was guilty of negligence in office for failing to stop the corruption and losses in the rice pledging scheme. She chaired the National Rice Policy Committee (NRPC) when she was prime minister.
The National Legislative Assembly is set to consider the proposed impeachment of Ms Yingluck in connection with the controversial rice pledging scheme at a meeting on Friday.