The measure is aimed at reducing not only their risks but also their operating losses and fiscal-budget deficits.

The Bank for Agriculture and Agricultural Cooperatives, which helps administer the government's rice-intervention programme, is a priority for account reconciliation. The government spends billions of baht every year to subsidise the bank's losses from the government's price-propping measures.

Ennoo Suesuwan, senior executive vice president of the bank, said the separation of the accounts was aimed mainly at reducing the need for government compensation. The BAAC has handled a lot of now-defunct government projects such as the "Cows for a Million Families" scheme, the farmers' debt moratorium, the village fund and the rice-pledging programme.

"Most of the projects face losses that force the government to budget for compensation, otherwise the bank's financial status and operations will suffer," he said.

Without paying compensation, the government's accrued debt to the bank will increase.

Unpaid compensation to government agencies under state-intervention projects has ballooned to Bt85 billion, of which Bt22 billion is due to the BAAC, Ennoo said.

The BAAC's losses from farm-crop intervention programmes have reached Bt18.41 billion. The interim government has to set up next year's budget to compensate for the losses.

The Finance Ministry has instructed the bank to form a committee to work on the details of account separation.

Achara Pongvutitham

The Nation