Measures to boost private investment and job creation are expected to follow soon.

Prime Minister Surayud Chulanont's interim government has faced public discontent over the economic slowdown caused by sagging investor and consumer confidence.

The money from yesterday's stimulus package will be distributed through state-run banks.

"Four state-owned banks plan to make new loans under the stimulus package worth Bt44.04 billion," Finance Minister Chalongphob Sussangkarn told a press conference. He spoke after meeting executives from the Government Savings Bank (GSB), Government Housing Bank (GHB), Small and Medium Enterprise Development Bank of Thailand (SME Bank) and Bank for Agriculture and Agricultural Cooperatives (BAAC).

The GSB plans to launch loan schemes worth Bt15.7 billion.

Director-general Goanpot Asvinvichit said it would offer low-income borrowers Bt5,000 each in order to prevent them using loan sharks, targeting 300,000 clients nationwide.

It will also provide loans for community enterprises worth about Bt1 billion.

Premium clients will also be offered more loans, while the bank will expand loans under its People's Bank scheme and for civil servants.

The GSB package will be launched at Money Expo 2007 in Bangkok from May 10-13. The loans will be available at its branches from May 14.

GHB president Khan Prachuabmoh said it would offer mortgage loans of less than Bt1 million with a three-year fixed rate of 4.99 per cent, down from 6 per cent.

Khan said the bank would coordinate with local authorities to provide housing loans for people upcountry on properties worth between Bt250,000 and Bt350,000. Buyers could also borrow about Bt300,000 if they wanted to build a house.

The GHB would increase its loans target to Bt95.5 billion this year from the previous figure of Bt90 billion, he added. New lending will start on Tuesday (May 8).

BAAC president Thirapong Tangthira-sunan said it would increase new lending by Bt18.84 billion from its previous target. The new loans would target farmers who participate in biodiesel projects, small entrepreneurs, community enterprises and environment conservation.

SME Bank president Pongsak Chewcharat said his bank would offer Bt4 billion of new loans in addition to its previous target of Bt31.5 billion. Bt1 billion would go towards rehabilitation of non-performing borrowers and Bt2 billion is earmarked for highly rated customers who repaid loans in the past 12 months without default. The bank would reduce its interest rate for premium clients by 0.25 to 1 per cent.

Chalongphob said that with new loans, the four key banks would have combined lending worth Bt466.04 billion.

Critics have predicted that state banks could not lend as they planned because low-income groups have high debts accumulated through populist policies initiated by the Thaksin government. However, Chalongphob said the SME Bank and Deputy Prime Minister Paiboon Wattanasiritham had tried to restructure debts for them.

Chalongphob also said he was considering more fiscal measures to boost property and other sectors, but ruled out cutting housing transaction fees. An informed source said new measures would also encourage investment in machinery to boost private investment.

Chalongphob could not give an assurance that economic growth would be more than 4 per cent this year and conceded confidence had been hit by political uncertainty.

The Finance Ministry is also consulting with key ministries to launch projects to create jobs.

Wichit Chaitrong

The Nation