State-owned Government Savings Bank (GSB) is willing to offer an interest rate at the lowest level possible to the Oil Fuel Fund if the fund needs to shore up its liquidity, says GSB president Vitai Ratanakorn.
The state Oil Fund has posted hefty losses from subsidising the domestic oil price. It sought loans from local financial institutions to boost its liquidity, but none were prepared to offer a loan to the fund because of concerns over its ability to repay the debt.
The cabinet approved a draft executive decree on Aug 16 to allow the Finance Ministry to guarantee loan repayment and borrowing by the Oil Fuel Fund Office worth up to 150 billion baht. The decree aims to increase the liquidity of the fund and help it cope with rising domestic energy prices.
The fund is expected to issue bonds for financial institutions to bid on as it seeks loans to support its liquidity.
Mr Vitai said if GSB competes in the bond bidding, it aims to offer the lowest possible interest rate to the fund because the bank was created to serve government social projects.
As of Aug 21, the Oil Fund was in the red to the tune of 118 billion baht. Of this amount, 76.7 billion baht was incurred from its oil price subsidy, while the other 41.2 billion came from subsidising the price of liquefied petroleum gas.
The fund suffered additional losses of 20 billion baht per month during March-June this year as a result of the impact from the ongoing Russia-Ukraine war.
The Energy Ministry estimates the fund could rack up total losses of 200 billion baht by the end of this year if it is unable to increase its liquidity.
Finance Minister Arkhom Termpittayapaisith previously suggested the Oil Fund focus on its own revenue and expense management first to increase liquidity, with borrowing a last resort. The fund should also not rush to borrow the maximum loan amount permitted of 150 billion baht, he said.