Thailand: Cabinet approves THB1.9tr third stimulus package

• The cabinet on 7 Apr 20 approved THB1.9tr spending to help people and businesses affected by the coronavirus disease 2019 (Covid-19), including THB600bn for six-month cash giveaways and THB500bn soft loans for small and medium-sized businesses.
• The package, the third phase of the stimulus programme to shore up the economy, will be backed by three executive decrees.
• The first decree will allow the government to borrow THB1tr from May 20 to Sep 21.
• Of the amount, THB600bn will go to implementing health-related plans and giving financial aid to affected people. This includes the THB5,000 monthly handouts to an estimated 9 million self-employed and laid-off people affected by the outbreak, which will be extended to six months from three previously.
• The portion also includes financial aid for farmers which has yet to be announced.
• The remaining THB400bn will go to economic and social rehabilitation through projects aimed at creating jobs, strengthening communities and building community infrastructure.
• The central bank will provide THB500bn in soft loans at 0.01% annual interest to financial institutions for two years to relend to SMEs with a maximum credit line of THB500mn at 2% interest. The government will absorb interest cost for six months for SMEs who receive soft loans.
• Moreover, the government will partly compensate financial institutions for losses that might be incurred on these additional new loans.
• In the event that these loans turn non-performing by the end of the second year, financial institutions will be compensated no more than 70% of the additional loans for borrowers with a credit line not exceeding THB50mn, and no more than 60% of the additional loans for borrowers with a credit line of THB50mn–500mn.
• Commercial banks and specialised financial institutions will also give SMEs with a credit line not more than THB100mn each a six-month debt moratorium on both principal and interest. About 1.7 million SMEs with total loans outstanding of THB2.4tr are eligible to participate.
• The other executive decree will stabilise the financial market by setting up the THB400bn Corporate Bond Liquidity Stabilization Fund (BSF) in which the central bank can buy corporate bonds to keep liquidity flowing. The scheme does not cover non-investment grade bonds. The total outstanding of the Thai corporate bond market amounts to THB3.6tr or more than 20% of the country’s GDP.
• In addition to the three decrees, Prime Minister Prayut Chan-o-cha said the cabinet approved a bill on the redistribution of routine fiscal THB3.2tr budget to be sent it to the House and Senate for approval when Parliament reopens in early Jun 20.
• He said the fiscal 2020 budget of each ministry would be trimmed and the proceeds, expected at THB80-100bn, would also be used for the relief.

External Link : https://www.bangkokpost.com/business/1894985/cabinet-gives-green-light-to-b1-9tn-stimulus

External Link : https://www.bangkokpost.com/business/1895165/bot-schemes-to-cover-1-7m-smes