Cabinet urged to extend ECP scheme

"The facility should be maintained for flexibility in borrowing, cost management and debt restructuring. Thailand also needs to raise foreign capital for economic and social development," the ministry said in a paper to be submitted to the Cabinet.

Proceeds from the ECP scheme will be used to retire loans maturing in less than three years and/or as bridge financing for government and state-enterprise projects pending long-term funding.

The borrowing needs no parliamentary approval, as it does not bind the Thai government and international organisations or foreign governments.

The 10-year arrangement will be forged between the ministry and eight commercial banks - ABN Amro, Barclays, Citibank International, Daiwa Securities SMBC, Deutsche Bank of London, Nomura International, Standard Chartered Bank and Bank of Tokyo-Mitsubishi UFJ. The paper, with terms of 7-365 days, is priced at the London Interbank Offered rate plus varying spreads.

The current ECP programme expires next month. From its inception in mid-1989 until last March, Thailand has borrowed $30.3 billion under the scheme. A portion of the proceeds was used to refinance government debt and the rest re-loaned to state enterprises. The ministry also said that normally, the cost of funds is lower through the ECP facility.