BAAC promissory note sale tanks

BAAC promissory note sale tanks

Public can contribute to farmer aid fund

The caretaker government's fundraising plan to pay off rice farmers suffered another setback on Thursday when an auction for the first tranche of 20 billion baht in promissory notes issued by the Bank for Agriculture and Agricultural Cooperatives (BAAC) saw weak demand.

A Finance Ministry source said there were few suitors, and finance permanent secretary Rangsan Sriworasart was quoted as saying the auction will be postponed until today.

The promissory notes are part of the BAAC's plan to raise 80 billion baht from state enterprises to pay off angry farmers, some of whom are rallying in front of the Commerce Ministry demanding pledging payments.

The failure of the note sale was not a surprise, as some state enterprises indicated their reluctance earlier for fear of violating the constitution and provoking protests from their labour unions.

Thanasak Wattanatana, governor of the Metropolitan Waterworks Authority, on Wednesday said the MWA cancelled its plan to allocate 1 billion baht for the notes after its labour union protested.

The caretaker government is months behind in its payments to more than 1 million farmers who pledged paddy worth 120-130 billion baht under the rice pledging scheme for the 2013-14 main crop.

The government first attempted to seek funds to pay farmers via a bridging loan from financial institutions, but banks were concerned about the legitimacy of any borrowing since the caretaker status limits the government's authority to add liabilities to a new government.

Its second attempt, which saw the BAAC attempt to borrow from the Government Savings Bank through the interbank market, was also rebuffed after the GSB was hit with a massive deposit pullout of more than 100 billion baht in a single week as depositors disagreed with the loan, forcing the bank to recall the loan from the BAAC.

In the meantime, a farmers' assistance fund has been set up by the BAAC to ease farmers' short-term financial woes. The special-purpose fund is a way for the public to help rice farmers either by loaning them money.

There are a couple ways to participate, depending on whether people want a return from the fund. The BAAC targets a total fund worth 20 billion baht, using the public relations budget of 10 million as seed money. The fund will be open for donations and subscription from March 3-June 30.

BAAC president Luck Wajananawat said those wanting to lend the farmers money without any interest return must deposit a minimum of 1,000 baht to the special fund. Lenders seeking a return must deposit a minimum of 1,000 baht for a 0.63% return per year. Both options allow participants to receive an invoice from the bank for use to reclaim the loan's principal once the fund closes on Dec 31.

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