SMEs facing ‘unusual’ trouble to get debt relief
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SMEs facing ‘unusual’ trouble to get debt relief

Otherwise good debtors who were affected by the pandemic could seek help

Deputy Finance Minister Julapun Amornvivat attends a special cabinet meeting on Sept 6. (Photo: Chanat Katanyu)
Deputy Finance Minister Julapun Amornvivat attends a special cabinet meeting on Sept 6. (Photo: Chanat Katanyu)

The Ministry of Finance plans to suspend debt payments for one year for certain small and medium-sized enterprises (SMEs) that faced unusual circumstances because of the pandemic.

Specifically, help will be available for businesses categorised by the Bank of Thailand as account status Code 21, indicating debts overdue by more than 90 days caused by an unusual situation, said Deputy Finance Minister Julapun Amornvivat.

The code was established to distinguish non-performing loans (NPLs) during unusual circumstances, namely the pandemic, from normal NPLs.

This group must have no history of defaults and regularly make payments, but are delinquent as a consequence of the pandemic, said the ministry.

This group numbers 3 million, with a total of roughly 300 billion baht in debts for the second quarter of this year.

The debt suspension programme will consider the outstanding loan limit to reduce the fiscal burden shouldered by the government in terms of interest payments to state financial institutions, said Mr Julapun.

SMEs secure loans from both specialised financial institutions (SFIs) and commercial banks, meaning this programme will take more time for consideration than the debt suspension for farmers, he said.

The Government Savings Bank (GSB) has the largest number of SME debtors listed as Code 21 among SFIs.

However, SMEs utilising the government’s debt assistance measures will not be included in this debt suspension programme as the ministry considers ways to allow them to enter a debt suspension programme in upcoming years, said Mr Julapun.

The ministry was directed by the prime minister to establish an SME debt suspension working group, consisting of representatives from the Fiscal Policy Office, the Bank for Agriculture and Agricultural Cooperatives (BAAC), GSB, the Thai Bankers’ Association and the Bank of Thailand, with the deputy finance minister as chairman of the group.

Regarding the three-year debt suspension project for farmers, the BAAC plans to convene a board meeting to discuss details on the extent and limit of the debt suspension. The Finance Ministry plans to bring it up at the cabinet meeting on Sept 26 for approval, he said.

Mr Julapun said the scheme for farmers differs from previous programmes as farmers can still obtain more loans from the BAAC for investment and income generation while in the scheme. Moreover, those who prefer to repay their debt can do so, with the repayment mainly used to reduce the principal.

He said the debt relief measures will be implemented concurrently with other policies to increase income for farmers, including free trade agreement negotiations with more countries to increase exports, instructing SFIs to provide additional loans to farmers for income generation, and the digital handout policy.

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