BANGKOK - Thailand's military government will lend farmers and their children a combined 11 billion baht (S$430 million) in an effort to fight off loan sharks as high levels of household debt drag on economic recovery, a state bank said on Tuesday.
The plan is part of the junta's measures to revive Southeast Asia's second-largest economy, which was hurt by months of political unrest. The army took power on May 22.
The central bank and the state planning agency indicated household debt levels this year were as high as 82.3 per cent of gross domestic product (GDP), up from 75.5 per cent in the first quarter of 2013, Somsak Kangteerawat, senior executive vice president of the Bank of Agriculture and Agricultural Cooperatives (BAAC), told reporters. "Therefore, the BAAC has come up with this scheme to tackle household debts, which are not in the main financial system," he said, adding that loan sharks charged interest rates ranging from 36 per cent to 60 per cent per year.
The bank has initially earmarked 10 billion ($313 million)for farmers - each can borrow 100,000 baht ($3,100) with an annual interest rate of 12 per cent and a 10-year debt repayment period, Somsak said, adding this would benefit 150,000 farmers.
Another 1 billion baht will be lent to farmers' children, who have other jobs, on the same terms, he said.
The programme will run for a year from Sept. 1.