The Finance Ministry is set to resume efforts to borrow 60 billion baht via a Bank for Agriculture and Agricultural Cooperative (BAAC) bond issue to settle overdue payments to rice farmers under the rice-pledging scheme following a spate of fund-raising setbacks.
Tanusak: Dispels concerns over validity
Caretaker Deputy Finance Minister Tanusak Lek-uthai yesterday said the planned sale of the state-backed farm bank's bonds with the ministry's guarantee would be clarified this month.
To dispel financial institutions' concerns about the borrowing's legitimacy, the Finance Ministry stands ready to seek Election Commission approval or even ask the Constitutional Court to consider whether the borrowing is valid, he said.
The caretaker government is months behind paying rice farmers who pledged their paddy produced in the 2013-14 main crop under the rice-pledging scheme, as its caretaker status means it has no authority to borrow fresh money.
At the same time, the Commerce Ministry's rice sales have failed to raise sufficient funds.
Recent efforts by the caretaker government to raise fresh funds to pay off rice farmers have flopped.
The cash-strapped rice-pledging scheme is the main populist policy that helped to sweep former Prime Minister Yingluck Shinawatra to power in 2011.
But the scheme, with pledging prices 40-50% above market prices, backfired after the government misjudged that withholding a large supply of rice from the global market would boost falling prices.
Presently, the caretaker government owes 82 billion baht to rice farmers.
Mr Tanusak said the BAAC is also expected to raise an additional 10 billion baht from farmer funds and another 12 billion from rice sales to settle the remaining debt.
Among the three funds — one for donation to farmers and the other two offering 0.62% annual interest and no interest — some 12 billion baht has already been raised.
Mr Tanusak said the Finance Ministry will this month complete estimates of the losses incurred from the rice-pledging scheme during the 2011-12 to 2013-14 main crops.
The Yingluck government spent 878 billion baht to fund the rice-pledging scheme.
Earlier, a subcommittee tasked with accounting for the scheme said the Pheu Thai-initiated scheme alone as of January 2013 had lost 220 billion baht for the first three crops, and the figure was expected to reach 400 billion for the five crops.
Separately, Mr Tanusak said the BAAC plans to issue another 200,000 loan cards to farmers this year, raising the number of cards from 4.08 million at present.
Non-performing loans from the BAAC loan cards stand at 0.46% of outstanding loans of 28 billion baht.
Meanwhile, a bond dealer at a local bank said the BAAC's planned bond sales might suffer the same fate as the previous fund-raising attempts even if the Finance Ministry cleared the legal risks.
The market may need the ministry to offer as much as 30-40 basis points on top of the government bonds for the BAAC's bonds to pay farmers, the dealer said.
