The Public Debt Management Office is set to borrow B50bn under the B1tn royal decree to fund cash handouts for farmers.

Office seeks diverse funding sources

The Public Debt Management Office is set to borrow another 50 billion baht under the 1-trillion-baht royal decree to fund the cash handout to 10 million farmers this week, the PDMO’s chief says.

To match the government’s recent approval to provide a monthly stipend of 5,000 baht for three months to 10 million farmers, the office will borrow 50 billion baht per month in phases, said directorgeneral Patricia Mongkhonvanit.

Under the royal decree on borrowing, 550 billion baht has gone towards financial aid for affected informal workers and farmers, 45 billion baht to healthcare-related expenditure and 400 billion baht towards economic and social rehabilitation through projects aimed at creating jobs, strengthening communities and building infrastructure.

Mrs Patricia said 70 billion baht in borrowing through promissory notes offered to local financial institutions is sufficient to continue the monthly 5,000baht cash giveaway to those adversely affected by Covid-19 and the government’s containment measures, though the number of potential recipients is now 16 million, exceeding the 14 million recently approved by the cabinet.

The 45-billion-baht central budget allocated to finance the cash handout scheme for people enables the Finance

Ministry to have enough money to fund the helicopter money scheme, she said.

The PDMO plans to offer 70 billion baht worth of promissory notes with a maturity of four years based on the Bangkok Interbank Offered Rate, which now stands at 0.97%.

Of the 24 million applicants for the cash handout, 1.7 million were rejected because they failed to pass ID authentication based on the Provincial Administration Department’s database. Of the total 22.3 million applicants who cleared authentication, 16 million were either approved to receive the subsidy or are in the final screening process, and the remaining 6.3 million were rejected.

Mrs Patricia said the PDMO has tried to diversify the funding sources and maturities for the 1-trillion-baht borrowing plan to match market demand.

Borrowing from overseas markets must be finalised within the next 1-2 weeks to seek approval from Finance Minister Uttama Savanayana, as credit facilities offered by such sources could be fully reserved.

“The overseas market’s borrowing sources offer attractive conditions with low interest rates and long-term repayment periods of 5, 10 and 13 years,” Mrs Patricia said.

Based on the government’s plan to borrow 600 billion baht under the 1-trillion-baht royal decree on borrowing this fiscal year, and the remaining 400 billion baht the next fiscal year, public debt is estimated to reach 51.8% of GDP at the end of September 2020 and 58% at the end of fiscal 2021, still below the ceiling of 60% under the fiscal sustainability framework, she said.