SME loan guarantee funds sought
Deputy Finance Minister Santi Promphat aims to seek a credit line of 60 billion baht from the 1-trillion-baht loan decree as loan guarantees for small and medium-sized enterprises (SMEs) through state-owned Thai Credit Guarantee Corporation (TCG).
The Fiscal Policy Office has been asked to make an assessment of whether or not the move would breach fiscal discipline, Mr Santi said.
If it can be done, the move would give SMEs the ability to access more loans, he said.
In the event that the TCG receives a 60-billion-baht credit line, it can provide loan guarantees for SMEs of up to six times, equivalent to 360 billion baht, Mr Santi said.
The cabinet in April approved a decree to authorise the Finance Ministry to borrow 1 trillion baht to fund the government's economic and social rehabilitation schemes in the wake of the pandemic.
Two other decrees were also approved.
An executive decree has allowed the Bank of Thailand to extend 500 billion baht in soft loans with a 2% interest rate to SMEs, with a credit line of no more than 500 million baht each.
The other executive decree aims to stabilise the financial market by setting up the 400-billion-baht Corporate Bond Liquidity Stabilisation Fund, via which the central bank can buy corporate bonds to keep liquidity flowing.
TCG president Rak Vorrakitpokatorn said the 60-billion-baht loan for SME loan guarantees will come from the 400-billion-baht budget for economic recovery, which is part of the 1-trillion-baht loan decree, and this is unlikely to be incompatible with the National Economic and Social Development Council's objective to use the budget for job creation.
For every one baht the TCG is able to guarantee a loan for SMEs of 5.60 baht, Mr Rak said, adding that the 60-billion-baht credit line will help SME loans.
Some 300 billion baht worth of SME loans are classified as special mention loans by financial institutions, out of 700 billion baht in total.
The TCG previously received soft loans from the central bank worth 57 billion baht to provide loan guarantees for struggling SMEs.
Of 17 trillion baht worth of total loans in the domestic banking system, about 6 trillion baht is SME loans. SMEs contribute 70% of total employment and account for 40% of GDP.