Thailand considers bond issues to help finance rice debt

[BANGKOK] Thailand's military junta is considering issuing bonds to refinance loans used for a controversial state rice-buying scheme to help reduce borrowing costs, Finance Minister Sommai Phasee said on Tuesday.

The debt is now estimated at around US$15.3-18.4 billion and the country will need to replace it, possibly with five-or seven-year bonds, the minister told reporters. "Now the market is likely accept bonds of no longer than 20 years," he said, adding the bonds would not be sold at once. "We will roll them over until the debt is paid off, which may take about 30 years," he added.

The ministry's public debt management office is preparing a plan on how to manage this debt, he said, without elaborating.

The military seized power in May in a bid to restore order after months of political unrest and tackle economic problems.

The rice-buying scheme was one of the key policies in the populist electoral platform that brought ousted premier Yingluck Shinawatra to power in 2011. Ms Yingluck's critics said the scheme was riddled with corruption, and the junta is still estimating the losses incurred.

In September, Bank of Agriculture and Agricultural Cooperatives (BAAC), which helps manage the rice scheme, said Thailand had lost 320 billion baht(S$12.6 billion) from the scheme and the final cost would rise substantially.

The bank president estimated the government still owed BAAC about 750 billion baht in debt related to the scheme.

REUTERS