Professor Dr. Kriengsak Chareonwongsak The non-agriculture

    The non-agriculture sectors would assume a heavier burden
This proposal would severely strain the national budget. At present (2000), farm NPLs stand at 36.9 billion baht. Because this money is charged an average interest of 10%, the state would need to allocate a minimum of 3.69 billion baht per year to cover the interest on these loans. In a worst case scenario, if farmers defaulted on all their current debts, which total some 2.28 hundred billion baht, it would require a government infusion of 22.8 billion baht for one year to cover interest payments alone.

    That may not be too large in terms of the total national budget of 9 hundred billion baht in normal circumstances, but this year (2000) the government will face higher expenses and more severe demands for budget monies from every sector. In addition, dealing with the large remaining public debts incurred during the economic crisis will place considerable pressure on the budget from 2001 onwards as the government has to set aside 8-10% of total government expenditure for repayment of public debts. This is a very high figure for these coming years.
This necessity has itself already severely curtailed government spending in other areas of the public sector. Normally, the government assigns 74% of the budget to the public sector, most of which goes towards civil servant salaries. Moreover, over the following fiscal year (FY 2002), the government will need to allocate a higher percentage of its budget to reform in many areas, such as expansion of basic education, restructuring the production sector and upgrading of work skills for low skilled laborers. Consequently, the ability of the government to cover farm debts is quite limited.

Farm debt moratorium more trouble than it’s worth
 Professor Dr. Kriengsak Chareonwongsak
Executive Director, Institute of Future Studies for Development
kriengsak@kriengsak.com, http://www.ifd.or.th