Incentives for farmers forgoing debt scheme

Incentives for farmers forgoing debt scheme

Current plan still light on details

Incentives for farmers eschewing the debt suspension scheme may resemble a policy implemented by the Thaksin Shinawatra administration. Pattanapong Hirunard
Incentives for farmers eschewing the debt suspension scheme may resemble a policy implemented by the Thaksin Shinawatra administration. Pattanapong Hirunard

The Finance Ministry is planning to offer incentives to farmers choosing not to enter the debt suspension programme aimed at reducing the government's fiscal burden, according to a ministry source who requested anonymity.

Resembling a policy implemented by the Thaksin Shinawatra administration, the incentive aims to promote financial discipline among farmers, said the source.

The three-year debt suspension programme for individual farmers offered by the Thaksin regime from 2001 to 2004 for debts of up to 100,000 baht also promoted incentives for farmers not wishing to enrol in the scheme, such as reducing the interest rate on loans to 3%.

Almost the same proportion of farmers chose to participate in the debt repayment moratorium as eschewed the scheme, with 51% of farmers enrolling and 49% sitting out.

The current government's debt suspension programme estimates 4 million small-scale farmers and 3 million small and medium-sized enterprises (SMEs) will be eligible.

The debt relief is offered to small farmers for three years and to SMEs for one year.

The ministry refrained from providing specifics on the scope and limit of the debt suspension, with these details largely determined by the government's fiscal responsibility in terms of interest payments to state financial institutions.

The ceiling for the debt suspension was set at 100,000 baht per person during the Thaksin regime, then increased to 500,000 baht per person during the Yingluck Shinawatra administration from 2011-14.

The difference between previous schemes and the current one is the programme promoted by the Srettha Thavisin administration provides opportunities for participating farmers to obtain additional loans from the Bank for Agriculture and Agricultural Cooperatives to invest in their farming operations, as farmers will be assessed on their ability to generate income to repay debt.

As part of a comprehensive reform of the farm economy in an effort to make it more sustainable, the Thaksin government provided debt relief to 2.25 million farmers and used a budget of 15.5 billion baht to compensate for interest payments.

Ms Yingluck's government provided debt relief to 775,000 farmers, representing a debt of 90.5 billion baht in total.

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