Thailand’s cabinet has approved a 100-billion-baht (US$2.8 billion) soft loan scheme aimed at helping The Thai cabinet has approved a $2.8 billion soft loan plan to support small and medium-sized enterprises (SMEs). The funds will be lent to commercial banks, which will then offer loans to borrowers at below-market rates.
Key Takeaways
- The Thai cabinet has approved a US$2.8-billion soft loan plan for commercial banks
- The purpose of the program is to enable small businesses to obtain financing at lower rates.
- The state-owned Government Savings Bank (GSB) will provide liquidity to commercial banks by offering loans at an interest rate of 0.01%
The purpose of the program is to enable small businesses to obtain financing at lower rates. The Government Savings Bank (GSB) will offer commercial banks loans at an interest rate of 0.01%, enabling them to provide loans to small and medium-sized enterprises (SMEs) at a maximum rate of 3.5% for three years.
The government explained that the measure comes in response to banking loan restrictions amid a slow economic recovery and rising debt.
Prime Minister Srettha Thavisin promised that new measures would be implemented next week, including economic support for high electricity prices.
In April, various banks announced that they would cut lending rates by 25 basis points for vulnerable groups for 6 months.
Prime Minister Srettha has worked with several commercial banks to lower lending rates and boost economic activity in Thailand. The BoT expects the Thai economy to grow by 2.6% this year, surpassing last year’s growth of 1.9%.
The Thai economy performance for the first half of 2024
During the first half of the year, the Thai economy experienced a mixed performance, reflecting both challenges and opportunities.
Thai economic growth was primarily driven by robust private consumption and a strong recovery in the tourism sector, which saw significant increases in spending on services such as accommodation and food.
The export of goods and public investment faced contractions, which posed challenges to overall economic growth.
Looking ahead, the Thai economy is projected to recover further, with growth expected to accelerate to 2.4% for the entire year, supported by sustained private consumption, tourism, and goods exports.
The government will continue to work on measures to boost economic activity, including addressing high electricity prices and supporting vulnerable groups through reduced lending rates.
