Thailand’s cabinet approved a soft loan package worth 100 billion baht ($2.8 billion) to assist small firms in obtaining loans. Deputy Finance Minister Paopoom Rojanasakul stated that the Government Savings Bank will lend to commercial banks at 0.01% interest, allowing them to give loans to small enterprises at no more than 3.5% per year. Retail loan rates in Thailand are currently above 7%.
The two-year programme allows small businesses to apply for loans until 2025. Paopoom explained that the cash comes from the state bank’s resources, not the budget, and is intended to inject capital into the economy.
The government implemented this strategy in response to stricter bank lending, a sluggish economic recovery, and mounting bad debt. PM Srettha Thavisin intends to propose additional steps next week to reduce rising electricity prices and boost growth in Southeast Asia’s second-largest economy.
In response to the PM’s request, Thai banks agreed in April to reduce loan rates for vulnerable populations by 25 basis points for six months. Despite Srettha’s urging, the central bank kept its benchmark interest rate at 2.50% for the fourth consecutive meeting last month. The central bank expects economic growth of 2.6% this year, up from 1.9% last year.
