BANGKOK - Thailand's military government has secured a loan of 40 billion baht (S$1.5 billion) to help pay money owed to rice farmers under a controversial state rice-buying scheme, the second loan it has secured, a senior Finance Ministry official said on Thursday.
The military government that seized power on May 22 has acted fast to resolve the problem of the money owed to farmers, with a state farm bank using its reserves to begin making payments.
Three banks won a bid to provide the loan, for three years with an average annual interest rate of 2.2705 per cent, Chularat Suteethorn, head of the ministry's public debt management office, told reporters.
The rate is much lower than a yield of 2.46 per cent on three-year government bonds on Wednesday. "It's the second time in history that we got a borrowing rate lower than a yield on government bonds with the same maturity," Chularat said.
The state-run Government Savings Bank (GSB) will lend 20 billion baht, Bank of Ayudhaya will provide 10 billion baht and Bank of Tokyo-Mitsubishi UFJ will give 10 billion baht, she said.
The money must be given to the ministry on June 19, Chularat said after the auction, at which 11 banks had offered to lend a combined 114 billion baht.
Earlier this month, the ministry tendered for a 50 billion baht loan, 12 banks offered a total 145 billion baht, and the GSB won the bid at a rate of 2.1792 per cent.
The borrowing will help cover total arrears of about 90 billion baht that had been owed to about 800,000 farmers.
They were left unpaid for months because a caretaker government did not have the authority to get funds from the central state budget and banks proved unwilling to lend to it.
The military now has the power to secure funds. It has made paying the farmers one of its priorities.
The GSB suffered big withdrawals of cash in February when some depositors protested against its decision to lend 5 billion baht to a state farm bank so the government of Prime Minister Yingluck Shinawatra could pay some farmers.
The savers had been unwilling to see their money used to help the government while others worried the loan would somehow destabilise the bank.
The bank called back the loan and its president resigned.