The government is now focusing on tackling the country’s formal debt problem, totalling about 16 trillion baht or 90% of GDP. This form of indebtedness is affecting about five million people and about 100,000 small and medium-sized enterprises.

Speaking during a press conference at Government House today, Prime Minister Srettha Thavisin said the debtors will be separated into four groups.

The first group are debtors who were directly affected by COVID-19 pandemic. The second group are those who have fixed incomes but are overloaded with debt which they are unable to service. The next group are those who have uncertain incomes, making it impossible to service their debts on a regular basis, and the fourth group are those who have had bad debts for a long time.

For the first group, he said that the debtors must be given help to free them from indebtedness or offered a debt moratorium to ease their financial burden. Since most debtors in this group, about 1.1 million, have non-performing loans (NPL) with two state banks, the Government Savings and the Bank of Agriculture and Agricultural Cooperatives, he said the banks must approach them and offer them financial support to enable them to return their debts to performing loans.

The estimated 100,000 indebted SMEs should be given a one-year debt moratorium and allowed to undergo refinancing.

The second group will be divided into subgroups, namely government officials, police and teachers who have mostly incurred with debts with state banks. The prime minister said all their debts will be transferred to one entity, such as a cooperative, so deductions can be made directly from their salary to settle their debt, but the deductions must leave enough to live a decent life with dignity and the interest rates charged must not be too high.

Another subgroup are those who have incurred credit card debt. If their debts are non-performing, the debtors must enter into a refinancing arrangement, with repayments for up to 10 years and interest rates drastically cut to 3-5%, from the current 16-25%.

For the third group of debtors, who do not have fixed incomes, such as farmers, leasing debtors and student loan debtors, the prime minster said they will be granted a debt moratorium, interest rate cut and lower repayment instalments.

For the fourth group, or the NPLs, numbering about three million, the prime minister said their debts must be transferred to asset management companies, so their indebtedness can be restructured so they can service them.

The prime minister said these approaches do not, however, address the root causes of the debt problem, but are just short-term measures, adding that longer-term measures, which are fair to all parties, should be developed to tackle the root of the problem.

He pleaded with all parties concerned for their cooperation, without which, he said, the government’s efforts to tackle the formal debt problem will not succeed.