The Public Debt Management Office (PDMO) must shoulder an average interest expense of 20 billion baht a year from a rollover of 500 billion baht debt incurred from the previous government's rice pledging scheme.
The office needs to roll over the 500-billion-baht debt until it is paid off, said the PDMO's bond market adviser Suwit Rojanavanich, adding it carries an average interest rate of 4%, or around 20 billion baht per year.
The Pheu Thai government's rice subsidy, which offered a pledging price 40-50% above the market price, cost 878 billion baht to the fund since it was unveiled in the 2011-2012 main crop and around 500 billion baht worth of debt is left over.
The rice-pledging scheme, a major populist policy which swept Yingluck Shinawatra to power in the 2011 general election, has suffered setbacks as it failed to boost the market price. Several million tonnes of milled rice have been kept in thousands of warehouses, in accordance with the government's policy that withholding a large supply from market will raise prices.
Mr Suwit said the Finance and Commerce Ministries are inspecting rice stocks to collect data for the account's closing, with 70% already audited.
Proceeds from selling stockpiled rice will be used to service debts, while the annual budget will be used to subsidise losses from buying rice at high prices and selling it at lower prices.
The Finance Ministry has set a 183-billion-baht budget to pay the debt in fiscal 2015. Of the total, 55.7 billion baht or 2.2% of the total expenditure will be used to pay principal and the remainder will be used for interest payment.
The Yingluck government successfully transferred the Financial Institutions Development Fund's debt of over 1 trillion baht incurred from assisting ailing financial institutions during the 1997 crisis to the Bank of Thailand, a move which allowed the government to reduce public debt ratio to GDP to pave the way for additional borrowing and lower the interest payment burden of 50-60 billion baht a year. The Finance Ministry's public debt threshold is set at 60% of GDP.
Separately, finance permanent secretary Rungson Sriworasat will preside over a public debt management meeting for fiscal 2015 on Friday. Public debt next fiscal year is close to the current year at 1.3-1.4 trillion baht.
The junta endorsed the budget for fiscal 2015 starting on Oct 1 at 2.575 trillion baht, while the government's revenue collection was estimated at 2.325 trillion.