Thai Finance Minister says they are planning debt relief measures and aim to ease mortgage rules

BANGKOK: Thailand is planning measures to tackle household debt, including suspending interest rates and reducing principal payments on some problem debts, the finance minister said on Friday.

Pichai Chunhavajira told reporters that, according to the proposals, the interest of debtors with debts overdue between one and 12 months will be postponed for three years and there will be a 50 percent cut in principal payments.

He said the measures, to be discussed with the Banking Association later on Friday, would also include extending the repayment period and allowing banks to consider issuing new loans.

“The debts of this group can be resolved,” he said, adding that debts that are overdue for more than a year may be more difficult to deal with.

Pichai said commercial banks had agreed on the measures in previous talks, adding that the ministry would consider helping the banks with their expenses if the proposals were accepted.

“Proposals to resolve debt will help individual borrowers restructure their debt and have greater access to credit,” Pichai said.

Thailand’s household debt-to-GDP ratio was 89.6 percent at the end of June; Household debt was among the highest in Asia at 16.3 trillion baht ($482 billion).

High debt has constrained consumption and suppressed growth in Southeast Asia’s second-largest economy, which has lagged behind its regional peers in recent years.

Pichai also said he would talk to the central bank about loosening loan-to-value rules to support the real estate sector.

($1 = 33.84 baht)