Struggle for rice funds continues

Economy March 04, 2014 00:00

By Petchanet Pratruangkrai,

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The Finance Ministry continues making a strong effort to raise funds to pay farmers in arrears under the rice-pledging programme through the issuance of Bt20 billion worth of saving bonds despite the remaining doubts over their legality.

Meanwhile, the Commerce Ministry has accelerated sales of rice from the government’s stockpile to as much as 800,000 tonnes a month, hoping to earn Bt80 billion in nine months. 
In the short term, there are only a few choices left for the government to obtain money either from the Farmers’ Assistance Funds announced last week or from the sale of rice to pay the farmers.
The Finance Ministry has failed twice to raise the needed money via short-term loans. First it held an auction for a bridge-financing loan of Bt20 billion from financial institutions. Then it called for bids for Bt20 billion in promissory notes for general investors. No one participated in either auction. 
The main reason for the lack of bidders was the lack of assurance that a caretaker authority can legally raise funds via bond issuance. Another reason was that many state enterprises were reluctant to take part because of strong opposition from their employees. 
“One of many ways to seek funds that the authorities are discussing is issuance of bonds. So far, there has been no conclusion on whether the Finance Ministry will guarantee the bonds. However, this is expected to be finalised in the next few weeks,” Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said yesterday.
He said the bonds should be guaranteed by the ministry, but “if the bonds are to be guaranteed by the BAAC instead, the matter will be discussed by the bank’s board first, considering the legal issues and risks”. 
The Commerce Ministry is expected to release about 800,000 tonnes of rice a month from the government’s stockpiles this year. It also expects China to sign another government-to-government contract with Thailand for rice purchase, while many other countries will order more from the Thai private sector.
Srirat Rastapana, permanent secretary of the Commerce Ministry, said a Chinese government agency had shown high interest in signing a G2G rice contract with Thailand soon.
According to a ministry source, China will this week sign a contract for purchase of about a million tonnes of rice. The contract will be signed by Chinese state-owned enterprise COFCO and the Thai Foreign Trade Department.
Previously, Thailand had to cancel a similar G2G contract with China, after that deal was suspected of being falsified and was investigated by the National Anti-Corruption Commission.
Srirat said Thailand should also be able to export more rice in the following months as many countries had placed orders with private exporters. Given the upcoming drought season, the government should be able to release more rice from the stockpiles, as many private traders needed it to supply foreign buyers, she said.
Meanwhile, the ministry has ordered the Thai Trade Representative in Indonesia to hold talks with that country’s Trade Ministry on reported dumping allegations against Thailand on the rice price.