Debt plan spooks pundits
According to experts, Thaksin’s theory” had fail.”
Academics warned the government on Wednesday about implementing former prime minister Thaksin Shinawatra’s plan to address family bill, warning that it might not solve the problem and have a negative effect.
They expressed caution against Thaksin’s government-led house debt buy-back program, which they acknowledged was possible but that if implemented alone, it might be a double-edged sword.
The government had organize under the initiative to arrange for individuals to pay off their debt to the bank system slowly.
The government had then assist people in rebuilding their life by removing their names from the National Credit Bureau (NCB), releasing them from bill, and allowing them to begin clean.
This action could get financed through private investment, as opposed to purely state funds, Thaksin claims.
Given the amount of household debt in Thailand, AMCs ‘ Associate Professor Wichai Witayakiattilerd, a professor at Thammasat University’s Department of Mathematics and Statistics, said allowing AMCs to obtain bad debts from financial institutions as opposed to using state money would be a more suitable strategy given the amount of home loan.
The nation’s household debt currently totals 15.54 trillion baht, with non-performing loans ( NPLs ) accounting for 4 %, or about 620 billion baht, according to the academic.
He predicted that an AMC could inject between 120 and 210 billion baht into the system, increase GDP by 1.5 days, and at least reduce bad debt by at least 50 % if it purchased bad debt at an average reduction of 35 %, which he termed a typical market mechanism.
He suggested that the system may be restricted to low-income people with debts under 500, 000 baht as opposed to being a blanket policy. He did point out that if consumers didn’t adopt better control and change their financial habits, the program would have risks.
Nonarit Bisonyabut, a senior research fellow at the Thailand Development Research Institute ( TDRI), said he disagrees with the proposal because it would only provide temporary relief rather than address the root cause.
He claimed that people are hoarding cash and that the present situation is due to rising loan, which makes lenders more cautious about lending. This limits the flow of money, and it has an impact on overall financial activity.
The request may provide a quick solution for home loan reduction right away. It fails to target the deeper structural issues, he claimed.
According to Mr. Nonarit, the problem may fix itself if the financial system makes the necessary changes.
The Bank of Thailand ( BoT ) stated on Wednesday that it is awaiting clarification on the policy.
The central banks said it focuses on promoting audio fiscal discipline to avoid moral hazard, and ensuring debtors you access upcoming credit at reasonable prices in order to address household debt.
Options require collaboration from different sectors, it said, given the complexity of Thailand’s home debt.
Sirikanya Tansakul, a member of the People’s Party ( PP ) in the party, expressed doubts about the effectiveness of Thaksin’s proposal because the bulk of the debt is in the informal sector, and commercial banks stand to gain the most.
She claimed that the government does intervene and that debtors might postpone making payments.
She even questioned whether an AMC has the resources to pay off the debt if the state doesn’t have enough money.
” I’m not sure what strategy will be employed to assist the individuals. The internet might want to ask Thaksin afterwards.
