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Thai govt to offer $615 mln of debt to help fund rice-subsidy scheme

Source: Reuters - Wed, 26 Feb 2014 10:02 GMT
Author: Reuters
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BANGKOK, Feb 26 (Reuters) - Thailand's caretaker government plans to sell up to 20 billion baht ($615 million) of short-term debt this week to help fund a controversial rice-buying scheme, according to documents seen by Reuters on Wednesday.

The Finance Ministry's Public Debt Management Office (PDMO) will auction eight-month, state-backed paper on Thursday, according to a letter sent by the PDMO inviting the Metropolitan Waterworks Authority to bid.

PDMO officials were not available for comment.

The proceeds would be for the Bank for Agriculture and Agricultural Cooperatives (BAAC) to pay rice farmers, some of whom have been waiting months for payment for crops sold to the government programme.

The state-owned BAAC manages the scheme, which has run into funding problems, compounded by political unrest that has left a caretaker government with little power to raise money.

As of Feb. 24, the government had bought 11.02 million tonnes of rice from the 2013/14 main crop valued at 185 billion baht, a BAAC official told Reuters on Wednesday.

The bank had paid farmers 69.5 billion baht of that, with 115.5 billion baht still outstanding, the official said, declining to be identified because he was not authorised to speak to the media.

The arrears have built up because the government has been unable to sell enough rice from its stockpiles.

Prime Minister Yingluck Shinawtra dissolved parliament in December to try to end a protracted political crisis.

A general election was held on Feb. 2 but that was disrupted by anti-government protesters, leaving a caretaker administration with limited powers to borrow or use government funds for the rice scheme.

Some spending has to be approved by the Election Commission and on Tuesday it authorised 712 million baht to be used from a central budget to pay farmers.

After a cabinet meeting the same day, Commerce Minister Niwathamrong Boonsongpaisan said the government would seek approval to use an additional 20 billion baht from the budget, adding the finance ministry was still working on securing "a large loan" to help with rice payments.

The Commerce Ministry has also sold 600,000 tonnes of rice from its stocks this month to raise funds and has opened a second tender for another 500,000 tonnes. ($1=32.5 Thai baht) (Reporting by Kitiphong Thaichareon and Pairat Temphairojana; Writing by Orathai Sriring and Alan Raybould; Editing by Kim Coghill)

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