Thailand’s finance minister announced on Friday a set of measures aimed at addressing household debt, including a proposal for the suspension of interest payments and a 50% reduction in principal payments for delinquent debts ranging from one to 12 months.
Pichai Chunhavajira informed the press that under the plan, borrowers falling into this category would benefit from a three-year interest moratorium and a significant cut in principal payments.
Additionally, the proposals, to be deliberated with the Bankers’ Association, involve extending repayment timelines and enabling banks to consider issuing new loans to borrowers.
Pichai emphasized the potential resolution of debts for this particular group, while acknowledging the greater challenges posed by debts overdue for more than a year.
Notably, commercial banks have shown agreement towards these proposed measures during prior discussions, and the finance ministry is open to assisting banks with expenses should the recommendations be approved.
The envisioned strategies are anticipated to aid retail debtors in restructuring their debts and enhancing their access to credit, presenting a positive outlook for debt management within the country.
As of the conclusion of June, Thailand reported a household-debt-to-GDP ratio of 89.6%, with household debt totaling 16.3 trillion baht ($482 billion), ranking as one of the highest levels in Asia.
The weight of high debt levels has subdued consumption levels, consequently impeding economic growth in the country, leading to a marked lag behind regional counterparts in recent years.
In addition to the household debt alleviation efforts, Pichai revealed plans to engage in discussions with the central bank to explore potential easing of loan-to-value regulations with the aim of providing support to the property sector.
