EC says it has no power to consider rice-scheme funding
January 22, 2014 00:00 By Business reporters
The Yingluck Shinawatra-led government has suffered a major setback in its attempt to seek new funds for its rice-pledging scheme, after the Election Commission (EC) yesterday insisted the government must make its own decision on whether to obtain loans f
Without the loans, payments to farmers under the rice-pledging scheme will continue to be delayed, threatening to hurt the Pheu Thai Party’s political support. Upset by the delay, many farmers are threatening to take steps to topple the government.
“I have plunged into debt because of the policy of this government,” lamented Phichit farmer Somkuan Songjaeng. “I won’t vote for the Pheu Thai Party in the upcoming election.”
EC secretary-general Puchong Nutrawong said at a press conference yesterday that his agency had no authority to consider a request to approve additional loans to pay farmers owed money under the scheme. “The matter is for the government to consider, and is [the government’s] responsibility,” he said.
The EC’s approval is required under Section 181 of the Constitution, which bans a caretaker government from making any decisions that could impose financial burdens on the next government.
The Bank for Agriculture and Agricultural Cooperatives (BAAC)’s board has insisted it will not use the bank’s liquidity to pay for the rice-pledging scheme.
Meanwhile, some groups of farmers plan to head to Bangkok this week with the ultimate goal of ousting the government, which they blame not paying for crops pledged several months ago.
Under the scheme, the government is expected to pay about Bt167 billion for some 10 million tonnes of paddy rice in the latest harvest season, from October 2013 to February 2014. But, the government now faces a financial problem, as it cannot release pledged rice from state stockpiles, even for government-to-government rice deals as it claims to have agreed to. Hence, it needs at least Bt130 billion to finance the project.
On Monday, many groups of farmers in Central provinces gathered to block roads to protest against the government’s failure to pay them for pledged rice. The government has failed to keep promises, made many times since November, to pay thousands of farmers.
Kittiratt meets EC
Yesterday, caretaker Finance Minister Kittiratt Na Ranong met with the EC to explain the government’s need to borrow another Bt130 billion to pay for the rice-pledging scheme, one of its most famous populist policies. He said before the meeting that the amount was in line with that approved by the Cabinet in September last year, before the House dissolution.
Caretaker Deputy Finance Minister Tanusak Lekuthai said yesterday after the BAAC’s hastily arranged board meeting that the board agreed not to use the bank’s cash flow to fund the rice scheme. But measures to ease the plight of farmers who have suffered losses would be launched.
Tanusak said before the EC announced its resolution that the bank would launch measures to resolve farmers’ financial problems if the EC did not allow the government to borrow more money to pay them.
The measures include a one-year debt extension with unchanged interest rates; penalty rate exemptions; and new loan allowances. The new loans will be equal to 20 per cent of the value of farmers’ certificates to sell their rice, with an interest rate of 7 per cent annually.
While the meeting between the EC and Kittiratt was ongoing, Kittisak Rattanavaraha, coordinator of a farmers’ network in the lower Central region, said farmers would continue protesting, despite being asked by Kittiratt to wait for the meeting’s results. He said farmers didn’t believe the EC would allow the government to take out more loans as requested. They would also escalate their protest, taking a more aggressive stance by rallying in Bangkok in the next few days.
BAAC president Luck Wajanawat said the bank’s board also discussed the source of funds for the rice scheme and insisted that only the government should secure the funding.
On the progress of rice pledged in the 2013-14 harvest season, BAAC executive vice president Supat Eauchai said about 10.41 million tonnes of paddy rice had entered the project, worth Bt170 billion. Of this amount, the BAAC had already paid about Bt51.9 billion for 3.2 million tonnes of paddy. The bank has only Bt4 billion left with which to make payments.
The National Rice Policy Committee projects that claims amounting to about Bt150 billion would be made for paddy in the latest harvest season. The BAAC has estimated that payments for paddy entering the project through till February would amount to Bt190 billion.