TBA puts losses from coronavirus at B1.3tn
Damage represents 7.7% of Thai GDP
The economy could suffer a record blow of 1.3 trillion baht in damage from the spiralling spread of the coronavirus, according to preliminary estimates by the Thai Bankers' Association (TBA).
The country's economic damage based on the preliminary reading represents 7.7% of GDP, on a par with the economic contraction during the financial crisis of 1997, said TBA chairman Predee Daochai.
The situation could deteriorate further if the outbreak cannot be contained by the end of the second quarter, Mr Predee said.
"If that's the case, the impact in terms of monetary value will be so big that the economy could suffer a larger blow than when the Tom Yum Kung crisis erupted in 1997," he said.
Thailand is estimated to lose 1.1 trillion baht in tourism receipts, Mr Predee said.
Coordination among the Finance Ministry, the Bank of Thailand and other financial institutions to offer assistance to small and medium-sized enterprises (SMEs) and take care of bond market stability under the third phase of the relief package is vital, he said.
The Finance Ministry and the central bank this month announced a third batch of relief measures totalling 1.9 trillion baht -- dramatically larger than the tally of the first two packages worth 400 billion baht in total and the country's largest-ever budget used for economic remedies -- to soften the blow of the outbreak and avert a debt meltdown.
Under the package, three executive decrees were needed.
The first decree will allow the government to borrow 1 trillion baht, of which 600 billion baht will go to health-related plans and financial aid to those whose jobs and businesses have been upended in the virus outbreak.
The remaining 400 billion baht will go to economic and social rehabilitation through projects aimed at creating jobs, strengthening communities and building infrastructure.
The second decree will allow the Bank of Thailand to offer 500 billion baht in soft loans with a 2% annual interest rate to SMEs, with a credit line of no more than 500 million each.
The third decree enables the central bank to set up a 400-billion-baht Corporate Bond Stabilisation Fund tasked with buying investment-grade bonds from companies that are unable to fully roll over their bonds maturing during 2020-21.
Mr Predee said policymakers launched the aid measures in a timely manner and in sizable amounts to avert the impact from deepening, and this makes it different from the 1997 crisis.
Health measures to curb the spread, treat coronavirus patients and alleviate the impact on the public are the top priorities, he said, and the royal decree on borrowing worth 1 trillion baht is needed after the central budget previously allocated for the purposes was fully drawn down.
The 500 billion baht in soft loans to cover 99% of SMEs could give them breathing space, prevent layoffs and help supply chains to continue functioning while people stay home to stop the virus spreading, Mr Predee said.
SMEs qualified to get the soft loans employ 13 million people in total, representing 85% of the workforce.
"Both monetary and fiscal policies could limit the slump this year and avoid it from snowballing into a bigger crisis," Mr Predee said. "Even though the situation rests on when Covid-19 vanishes, I believe that the authorities have ample resources to steer the country through the crisis."