Thailand’s economic cabinet has directed the Finance Ministry and the Bank of Thailand (BoT) to expedite addressing household debt, particularly bad debts in housing, cars, motorcycles, credit cards and student loans as the economy has yet to see clear signs of recovery.
Speaking after the economic ministers' meeting chaired by Prime Minister Srettha Thavisin held on July 15, Finance Minister Pichai Chunhavajira said the PM had given instructions to related agencies to speed up addressing the economic downturn due to the lack of clear signs of recovery.
The biggest issue is the bad debt problem in the household sector and small- and medium-sized enterprises, particularly the critical household debt.
Currently, household debt stands at 13.6 trillion THB (372 billion USD), accounting for 90% of GDP, with around 1 trillion THB being bad debt, and this is likely to increase as more debts are at risk of becoming bad with half of this debt related to housing and cars, and others such as credit card debt.
To address bad debt in the housing sector, the Government Housing Bank has been instructed to extend the home loan repayment period up to a maximum age of 85 among borrowers. Extending the home loan repayment period will help ease the burden of homebuyers amid high expenses and living costs.
Pichai said the government will also ask commercial banks to assist borrowers struggling with repayments by extending the debt period and reducing principal payments.
For bad debts related to cars and motorcycles that have already been repossessed, provisions for bad debts will be made and the total debt amount should be reported in the next meeting, he said.
Regarding credit card debt, the system has 24 million credit cards, with 1.4 million in debt, and this is expected to increase to 2-3 million cards.
To address this problem, the BoT will be asked to coordinate with credit card companies to reduce the minimum payment from the current 8% to 5%, with plans for further adjustments.
Pichai said the measures to address bad debt will be implemented as quickly as possible, as the government wants to reduce, extend and manage debt, helping the economy gradually recover./.
VNA
