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Finance Minister Korn Chatikavanij said the measures were: Bt200 million in insurance coverage for tourists visiting Thailand from May to October; a Bt5-billion loan extension from the Small and Medium Enterprise Development Bank (SME Bank); and a loan guarantee from the Small Business Credit Guarantee Corp (SBCG) to finance tourism operators' corporate tax payments.

Tourism Council of Thailand president Kongkrit Hiranyakit said despite the welcome measures, the industry's outlook was dependent on global conditions, including the economic crisis and the swine-flu outbreak, which has now spread to South Korea.

"The flu is a worrisome factor, though it has not yet reached Thailand. If it hits Thailand, the impact will be huge. In the past 20 years, the tourism industry has contracted twice: during the Sars outbreak, and then [the double hit of] the spread of bird flu and the tsunami," he said.

Thai-American Tourism Association president Phitsanu Konggunpai said American tourist arrivals in Asia would grow by only 4 per cent this year to 5.8 million visitors, against 8-per-cent growth last year.

The growth rate for Thailand is expected to be 3 per cent to 600,000 people, compared to 5.2 per cent last year.

Phitsanu said the flu outbreak was less worrisome to American tourists than the country's political conflict.

He said the current impact of the outbreak on Thailand was minimal, due to the lack of direct flights from Mexico. However, many Hong Kong-based airlines fly to Mexico.

As for tax payments, Korn said he expected the borrowing to total about Bt10 billion, which would be fully guaranteed by the SBCG. The loans will charge 4 per cent in annual interest, and the borrowers will be offered a three-month grace period.

Corporate taxes for 2008 are due next month.

The insurance measure will cover about 5 million tourists and assures them of coverage should they be negatively affected by political conflicts. Any tourists visiting the Kingdom during the six-month period and affected by such events will each be entitled to maximum compensation of US$10,000 (Bt355,000).

The measure was approved following a sharp downward revision of the estimate for tourist arrivals |this year, from 14 million to 11 million.

"The measure should ensure no further drop in tourist arrivals. The Finance Ministry will discuss this issue with Thai insurance companies soon," Korn said.

The Cabinet also approved the SME Bank's provision of low-interest loans to affected tourism operators. Under the Bt5-billion fund, the loan will attract interest 3 percentage points below the minimum lending rate, or 4 per cent per annum. Each borrower is entitled to no more than Bt5 million.

Deputy Finance Minister Pradit Pataraprasit said after the Cabinet meeting that the loan was part of the smePower project. Borrowers will be offered a one-year grace period.

"Targets are those who operate hotels, tour companies and others closely linked with the sector and which have suffered from a drop in tourist arrivals," Pradit said.

Loan applications must be submitted by July 31. The SME Bank will decide on each application within 15 days.

Pradit said loan applicants could contact him directly at smepower.tourism@gmail.com should they encounter any problems.

Meanwhile, the Cabinet appointed Interior Minister Chaovarat Chanweerakul as chairman of a committee tasked with solving the debt problems of the National Housing Authority (NHA). The committee must submit a plan within the next two months.

The NHA recorded losses of Bt991 million last year and Bt1.28 billion in 2007. A third consecutive loss would deprive it of a loan guarantee from the Finance Ministry.

The Cabinet also approved a cut in the number of Ua Athorn units to be developed by the NHA, to help cut expenses.

This year, the authority will build 281,556 units instead of the planned 300,504 homes. The units will also have to be built in areas where there is demand.