FIDF to be cleared in 24 years: Prasarn

Bank of Thailand Governor Prasarn Trairatvorakul sets the preliminary goal to clear the Financial Institutions Development Fund's Bt1.14 trillion debt within 24 years.

While the surcharges, supported by the executive decree which won the Constitution Court’s clearance on Wednesday, would raise billions, the central bank’s other revenue would help clear the debt.

At the press conference on Wednesday, Prasarn envisioned that the repayment period may be faster than that. Once the debt burden accounts for a smaller portion of GDP, say 10 years from now, the concerned authorities at the time may decide to clear the debt in one lump sum payment.

Prasarn said that the rush now (through higher surcharges) is immpossible as it will affect many parties.

From a deposit base of about Bt10 trillion, the extra fee of 0.07 per cent would raise about Bt7 billion per annum.

The governor said that regulations involving the surcharge collection would be announced before the collection takes place in the second half. Banks will pay additional surcharges on their deposit base, covering all deposits, bills of exchange and short-term bonds.

"If the surcharges can raise a higher amount than expected, we can lower them later," he said, adding the review will take place in three years.

While expressing worries about the competitiveness of commercial banks against their regional peers through the higher cost, he said banks are now comfortable with the additional fee though this will slightly push up their costs.