The new government's tentative policy of debt suspension for farmers should help to mitigate the debt burden of borrowers, provided it is targeted at the vulnerable segment, say business leaders.
While Thailand's economy is slowly rebounding from the pandemic setback, some fragile borrowers are still in need of debt relief measures from financial institutions, especially farmers, said Payong Srivanich, chairman of the Thai Bankers' Association, after a meeting of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) on Thursday.
"If the debt suspension is focused on the target segment rather than a blanket policy, it would be a suitable measure," he said.
The JSCCIB also proposed the new government prioritise the reduction of small and medium-sized enterprise (SME) and household debt in a broad and sustainable manner.
Mr Payong said the Bank of Thailand and financial institutions including commercial banks, specialised financial institutions and non-banks should cooperate to solve the country's swelling household debt problem.
The related parties should pay attention to the vulnerable segment, which covers low-income earners, farmers and SMEs, he said.
The banking industry has maintained interest rates on loans following the latest policy rate hike by the central bank last month to 2.25%. The move should partially help to ease the debt burden of borrowers, particularly the vulnerable segments, said Mr Payong.
He said economic expansion is a key factor to strengthen the debt payment ability of borrowers, as the income of both business and household sectors improves.
The JSCCIB is waiting for the government to announce its economic policy, which is scheduled for Sept 11, before the committee forecasts the Thai economic outlook.
The panel also proposed the government should prioritise reducing the cost of living, particularly transport and energy costs, through price subsidies.
The government should also consider economic stimulus measures for the tourism and export sectors, said the JSCCIB.
At the meeting, the committee slashed its growth forecast for 2023 from 3-3.5% to 2.5-3%.
The revised outlook was attributed to GDP growth of only 1.8% in the second quarter this year, missing the private sector's projection of 3.1%.
A slowdown in the global economy for the remainder of this year and sluggish Chinese economic growth are expected to weigh on Thailand's export performance. Thai exports have contracted for 10 consecutive months.
The panel cut its 2023 export projection from 0-2% to a contraction of 0.5-2%.
The private sector expects foreign arrivals to increase to 30 million this year, pushing up GDP growth by 3% despite lower spending by foreign travellers.
Spending per person per trip among visitors is 13% lower than projected, according to the JSCCIB.
The committee also adjusted its inflation assessment from 2.2-2.7% to 1.7-2.2% for this year.