Bangkok, BoT points out that the economy is recovering. But it’s still not thorough – not balanced. Expect negative inflation until February 2024 before starting to rise. This year’s assessment is within the target range of 1-2%, confirming that there will be no special MPC meeting, ready to resolve household debt intensively.
Mr. Piti Disayathat, Assistant Governor Monetary Policy Line The Bank of Thailand (BoT) and the Secretary-General of the Monetary Policy Committee (MPC) discussed the BoT’s monetary policy, divided into 3 parts, namely: allowing the economy to expand sustainably; Keep inflation within the target range sustainably and financial stability
The economy has recovered in many dimensions. But it is still not thorough and unbalanced. Lack of momentum from the export and production sectors Structural factors are constraints on expansion. Thai exports grew at a lower rate than competing countries. The complexity index of Thai export products increased only slightly. While many countries have i
ncreased For this year, it is seen that the economy expanded more comprehensively, especially in the area of ??expansion. The global electronics industry cycle will return. But structural risks will prevent the demand recovery from expanding as expected.
In terms of inflation in Thailand, it dropped quickly. Help limit the cost of living from rising. Especially fuel and meat, which previously increased, decreased as a result of government measures to subsidize energy. The prices of products have not decreased widely. Negative inflation does not reflect weakening purchasing power. Meanwhile, inflation expectations are still within the range. This is the reason why inflation is negative and the Bank of Thailand has not reduced the policy interest rate. Inflation is expected to be negative until at least February 2024 and will gradually increase. This year, inflation is expected to be in the range of 1-2%. which is still within the target range
Financial stability Consider that high debt levels are a key vulne
rability of the Thai economy. Household debt to GDP has decreased but remains high at 90.9%, corporate debt 87.4%. The majority of household debt is consumer debt and credit cards, while Thailand’s interest rates are very low compared to the world.
Overall, the economy can still move forward.
The BoT is mindful of entrepreneurs who are in trouble and have debtors who are in difficulty. The BoT has implemented measures to continue to be in line with the policy interest rate framework.
Mr. Piti emphasized that the BoT listens to opinions from all sides. Especially the government and the Ministry of Finance There was always talking. and always review whether the policy has been implemented correctly or not It is confirmed that the Bank of Thailand is definitely following its policy in the wrong direction. However, the Committee is ready to adjust its policy position accordingly. If the economic and inflation trends change from the estimates Confirmed that until now there is no need to hold a special meeting o
f the MPC.
Ms. Suwannee Jesadasak, Assistant Governor The Bank of Thailand’s Financial Institutions Supervision Division revealed that the transmission of Loan interest rate Go carefully, especially MRR to take care of small debtors. Including continuous assistance to vulnerable debtors. The proportion of interest rate transmission for MRR loans is at 49% from the past at 58%. In the past, the BoT has reduced interest rates to approximately 2-4%.
For progress in providing assistance from financial institutions The total debt burden that received assistance as of October 2023 amounted to 3.46 trillion baht or 6.10 million accounts. Approved rehabilitation loans (2 Jan. 2024) amounted to 25.9 billion baht or 65,931 individuals. The proportion of loans under The BoT’s assistance measures are 11.5% higher than other countries, compared to Australia. and New Zealand at less than 1%, while Indonesia, Malaysia, China, and India are at 1-5%.
The BoT places importance on resolving household debt in a sustainable wa
y. Most recently on January 1, 2024, they issued guidelines for responsible and fair lending (Responsible Lending), which defines the role of creditors to be responsible to customers. throughout the debt cycle appropriately and other related criteria In particular, it sets standards for creditors to provide assistance to debtors who have persistent problems (Persistent Debt). It is the right of the debtor who is eligible for giving
The debt can be settled within 5 years with an interest rate not exceeding 15% per year.
As for the difference in interest rates on loans and deposits of commercial banks, there has been some criticism from the public that The bank offers low interest on deposits. But the loan interest is high. Many people can’t pay installments. Ms. Suwannee said that on this issue, the BoT must discuss and discuss more closely with commercial banks.
While Mr. Sakkapop Panyanukul, Senior Director The Bank of Thailand’s Financial Markets Department said that the recent slowdown in lending was du
e to an increase in repayments during the post-Covid period, however, it was seen that there was a trend of increasing lending.
As for private sector debt instruments, they continue to grow. Even though fundraising costs have increased somewhat, there are outstanding balances and the growth rate of private sector debt instruments. Increased to 9% in 2023. In terms of private debt instrument risk, roll over risk is limited to issuers with specific problems.
Source: Thai News Agency