Moody's Investors Service's credit-negative report on the rice pledging scheme is wrong, Prime Minister Yingluck Shinawatra said on Tuesday, and the government will issue a report explaining why.
Ms Yingluck said the latest information on the scheme - one of the most controversial flagship policies of the ruling Pheu Thai Party - will be used to rebut the rating agency's viewpoint.
Moody's on Monday warned that accumulated and potential losses from what it termed the "rice buying scheme" will make it harder for the government to reach its goal of a balanced budget by 2017 and are a negative factor in Thailand's credit rating.
Losses from the rice-pledging scheme in the harvest season 2011-12 were bigger than the Finance Ministry originally forecast and Thai authorities appeared committed to continuing the scheme without any changes, it said.
Democrat Party leader Abhisit Vejjajiva said the Moody's report underscored the opposition party's warning of the damage the government's policy is causing because of the loopholes and high cost of running the scheme, which fostered the corruption of politicians.
''We don't mind if the losses from the scheme actually benefit the future of Thai rice and Thai farmers,'' he said on Blue Sky TV, a satellite channel run by the Democrats. But it was instead benefitting the government and traders, he said.
Mr Abhisit urged the government to accept the truth, that the damage caused by the rice scheme was far more serious than previously anticipated. A downgrading of Thailand's credit rating by Moody's would affect the country as a whole, because investors would face higher interest on loans, he said.
Thailand is currently rated Baa1, with a stable outlook, by Moody's.
Moody's said in its report it was unable to confirm figures with government sources, but new estimates based on actual amounts received implied losses of 200 billion baht from the 2011-12 harvest year.
"This is significantly higher than previous estimates by the World Bank discussed in our April Credit Analysis, which pegged losses at 115 billion baht, as well as Thailand's Ministry of Finance forecast losses of 70-100 billion," said Moody's.
The rice subsidy scheme was set up in October 2011 to boost Thai farmers' incomes.
The government's purchase of rice at as much as 50% above market prices carries a fiscal cost when the rice has to be resold.
The scheme is also blamed for a decline in rice exports. Total earnings from rice exports fell in 2012 to US$4.6 billion from $6.4 billion in the previous year, owing to the government withholding rice stocks for sale in the hopes world rice prices will rise, the Moody's report said.
"In volume terms, Thailand's rice exports fell to 6.7 million tonnes in 2012, from 10.7 million tonnes in 2011, the lowest level since 2000.
"However, given that rice exports make up a relatively small proportion of Thailand's total exports (averaging 2.6% over the past 10 years), the direct and immediate effect on Thailand's balance of payments is not material," it said.