Payment is expected to be made after the Songkran Festival to farmers still owed money under the rice-pledging scheme, the head of the Public Debt Management Office said yesterday.
"Several types of borrowings may be made after the Songkran Festival. The amount may start from Bt5 billion or Bt10 billion, through to Bt100 billion, depending on the market situation and demand. About Bt100 billion is required for payments under the rice-pledging scheme," said PDMO director-general Chularat Suteethorn.
She said the likely forms of borrowing were term loans, financial negotiable notes and promissory notes.
"To prevent a bidding failure, the PDMO has tried to achieve greater understanding among financial institutions of the legal issues involved. They are less concerned [than during the previous, unsuccessful bidding to provide funding]," she said.
"We hope not to see a repeat of such a situation. We have looked at the market situation, and market liquidity is high. The PDMO is issuing government bonds as usual, and demand is two to three times over subscription," she added.
The issuance of Bt250 billion-worth of government bonds will go ahead as planned, said the PDMO chief.
Next month, the PDMO plans to launch bonds worth about Bt60 billion, and more bond issues will be introduced until the Bt90-billion limit is reached. In the previous six months, bonds worth about Bt100 billion were issued.
Commenting on Japan Credit Rating’s (JCR)’s outlook downgrade on Thailand from stable to negative, Chularat said she saw it as a warning for the Kingdom’s economic stability in the short and medium terms, which needed close monitoring.
The main risk to the Thai economy is the political unrest, which could affect growth in the next period through to the medium term, she added.
If the political stalemate is prolonged, it could impact on Thailand’s credit rating. However, JCR remains confident in the country’ strong fiscal policy, high foreign reserves, strong financial stability and robust financial institutions.
Currently, there is no single issue causing Thailand to face an economic crisis, she said.
"Monetary and fiscal stability is high. However, there may be concern over the political unrest, which could affect economic activities and growth in the next periods. These are the JCR’s observations," she explained.
In the previous two months, two leading credit-rating agencies – Moody’s Investors Service and Standard & Poor’s – maintained their outlook on Thailand, given its strong fiscal stance and the stability of its financial institutions.
If the current political impasse can be broken by the formation of a new government, such political concern will end instantly, Chularat said, adding that the outcome of next year’s credit-rating reviews depend on the country’s economic and political situations.
"We hope the political situation will find a solution smoothly and rapidly … However, if there is a downgrade of the country’s credit ratings, [borrowing] costs will be affected. Currently, there remains no effect on interest rates," she said.
She said that the JCR’s downgrade of the Kingdom’s outlook had not affected the markets as yet.
The yield curve is steeper for bonds with three- to 10-year maturities. However, the curve is relatively smooth for those with longer maturities, and long-term interest rates have not seen much change.
Rungson Sriworasat, Finance Ministry permanent secretary, said that for the rice-pledging scheme, the Budget Bureau reported the Foreign Trade Department had paid about Bt10 billion into the ministry’s coffers, and that another Bt10 billion was expected by the end of May.
He said the Revenue Department, Excise Department and Customs Department had all been assigned to speed up their procedures and planning for tax collection in the next six months. A meeting to discuss this is scheduled for the middle of this month.
"It’s certain that there will not be a shortfall in government revenue. We will not revise the revenue target, but will adjust operating procedures to allow revenue collection to achieve the targets," he added.
The official said the current fiscal year’s budget, for items such as salaries and implementation, could be used if the fiscal 2015 budget had not been announced. However, the new investment budget could not be employed ahead of time.
According to a Comptroller-General Department report, budget disbursement has been on-target so far this fiscal year.
However, the budget for projects worth more than Bt1 billion may not be implemented, given their requirement for Cabinet approval.
"The Excise Department asked for the central budget to refund car buyers under the first-car scheme. The issue will be forwarded to the Cabinet for approval," said Rungson.