Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong has insisted the government's rice pledging will not incur losses of up to 300 billion baht as critics claim, and says he is ready to clarify the scheme.
Mr Kittiratt's remarks yesterday were in response to a research study by the Thailand Development Research Institute (TDRI). The study claimed that the rice pledging scheme would swell public debt and hurt the country's economy.
The TDRI was behind the Democrat-led government's rice price guarantee scheme, so the institute's criticism of the Pheu Thai-led government's policy is to be expected, he said.
He insisted the rice policy will hold up to scrutiny from both the upper and lower houses of parliament.
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He said the rice pledging scheme, which pays 15,000 baht per tonne for white rice paddy, might incur some losses, but the figure would not reach 300 billion baht.
MR Pridiyathorn Devakula, a former deputy prime minister, claimed yesterday the government's populist policies, particularly the rice scheme, could damage the country's financial health.
If the rice scheme causes huge losses, it would be difficult for the government to control soaring public debt, he warned while delivering a keynote speech on corruption.
He urged anti-graft networks to closely monitor the scheme. Deals to sell government-stockpiled rice should be made public, he said.
Senior TDRI economist Nipon Poapongsakorn said the government would struggle to provide liquidity for the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) , which is tasked with financing the rice scheme. The government has been unable to recoup its investment from old paddy stocks, and must simultaneously provide subsidies for other crops such as rubber, he said.
To keep the project running, the government has already diverted about 70 billion baht of unused financial guarantees from other state enterprises to the BAAC so that it could increase its borrowing capacity to fund the rice pledging scheme, Dr Nipon added.
The Finance Ministry stated in a letter to the Cabinet's Secretariat on Sept 18 that it would limit its guarantees for BAAC financing to 150 billion baht for the harvest season starting in October.
Loans taken out by the BAAC with the ministry's guarantee would increase the interest burden on the bank, the TDRI economist said. Dr Nipon said the government spent 448 billion baht on the rice pledging scheme last year and was expected to suffer 170 billion baht of losses, assuming it could sell the rice stocks within two years.
"One of the government's excuses in keeping the scheme is that the farmers will remain poor without its help. But a study shows that more than half of the farmers also rely on other income sources besides rice growing. The study also shows that the major income source of the poorest group of farmers is not from growing rice," he said.