The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) may have to extend the debt moratorium period because of the Covid-19 crisis and unimproved farm product prices, says a Finance Ministry source.
Finance Minister Arkhom Termpittayapaisith, as chairman of BAAC, has asked the bank to consider extending the debt moratorium period and undertaking debt restructuring to ease borrowers' financial burdens.
The BAAC's board of directors is scheduled to reconvene on Oct 29.
The meeting will determine a move to refund interest burden for BAAC customers as an incentive to service debt. The board of directors will determine the percentage portion of refunded interest.
The bank has continuously implemented a debt moratorium for farmers and found that 75% of them can resume normal debt servicing after entering the programme.
Under the planned extension of the debt moratorium period, the ratio of borrowers returning to service their debts normally is not expected to be close to 75%, as economic conditions are still depressed, with low farm prices adding to woes, said the Finance Ministry source, who requested anonymity.
The plan to extend the debt moratorium period will be an encouragement to farmers to resume normal debt servicing, the source said.
The number of farmers entering the debt moratorium programme is 3.8 million, accounting for loans valued at 1.2 trillion baht from the bank's total loan portfolio of 1.4 trillion.
The income guarantee programme for five crops by the Commerce Ministry will be extended, the source said.
The five crops are rice, rubber, oil palm, cassava and corn.
A programme to guarantee farmers' income is implemented by referencing the price of agricultural products so farmers can sell their produce at no lower than the reference price.