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Published on April 2, 2008

The Cabinet yesterday approved a multibillion-baht loan and debt-moratorium package for grass-roots communities as well as small businesses.

This second major economic stimulus package from the Samak Sundaravej government since it took office some two months ago will provide credit and suspend debts worth a combined Bt72.9 billion this year for grass-roots people.

SMEs and export industries will be granted loans worth Bt94.9 billion.

The first stimulus package covering tax breaks and other incentives worth about Bt43 billion was directed at individuals, listed and unlisted firms and the real-estate industry.

Pradit Pataraprasit, deputy finance minister, said the Bank for Agriculture and Agricultural Cooperatives (BAAC), Government Housing Bank (GHB) and Government Savings Bank (GSB) would increase their lending by 14.8 per cent to Bt569 billion this year to support the stimulus programme.

The BAAC will waive the payment of Bt17.9 billion in principal and interest from farmers for two years.

The GSB will lend Bt5 billion to 250,000 low-income earners, involving about 1 million households, while the GHB will lend Bt10 billion to first-time home-buyers with monthly incomes under Bt15,000.

Up to Bt40 billion in mortgages will be extended to civil servants, buyers of Ban Ua Athorn affordable homes and members of the Social Security Fund.

About 200,000 farmers will be offered Bt1 billion in loans this year to grow cassava as a feedstock for biofuel plants.

The GSB and BAAC will provide new loans worth Bt4 billion and Bt16 billion, respectively, to the 77,000 villages nationwide on top of their outstanding Bt7.7 billion in loans.

Pradit said the performance of the village funds, set up by the Thaksin government several years ago, would be evaluated and those with good records upgraded into permanent financial institutions in each of their communities.

Federation of Thai Industries chairman Santi Vilassakdanont hailed the government's measures for lifting the purchasing power of grass-roots people.

"If the measures are enforced as said, it'll be a boost to the economy," he said.

On March 25, the Cabinet approved a Bt40-billion budget for each of the country's 77,000 villages depending on their size.

Under this small, medium and large village - or SML - programme, "S" villages will get a budget of Bt200,000 each, while "M" and "L" villages will get Bt250,000 and Bt300,000, respectively.

This policy has been controversial because it bypasses state budget disbursement procedures, allowing local people to manage the money themselves.

Pradit said all these moves were aimed at helping grass-roots people and small business operators to gain access to sources of capital for community and business development.

The government has set an ambitious growth target of 6 per cent for the economy this year.

The Nation