BANGKOK - Thailand's finance ministry has secured a loan for 50 billion baht (S$1.92 billion) to make rice payments to farmers who have been waiting months for money owed under a controversial state rice-buying scheme, a senior ministry official said on Tuesday.
The military government that seized power on May 22 has moved quickly to unblock the situation, with a state farm bank using its reserves to begin making payments.
The ministry will open bidding for another 40 billion baht in loans on June 12, Chularat Suteethorn, head of the ministry's public debt management office, told reporters.
The Government Savings Bank won the bid to provide the first loan, which is for three years with an annual interest rate of 2.1792 per cent, Chularat said, adding that compared with a 2.45 per cent yield on three-year government bonds.
The state bank will give 30 billion baht to the ministry on June 6 and the rest on June 13, she said after the auction, at which 12 banks had offered terms to lend a combined 145 billion baht.
The borrowing will help cover total arrears of about 90 billion baht that had been owed to around 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.
After months of political turmoil, the military overthrew the government and its administration now has the power to secure funds. It has made paying the farmers one of its priorities.
The Government Savings Bank suffered big withdrawals of cash in February when some depositors protested at 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.