Thailand approaches Japan for emergency support loan

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Thailand returned to Japan cap in hand and requested another emergency bailout. Last month, the government made the announcement to approach Japan for the loan. On May 3, Thai Finance Minister Akom Termpittayapaisit told Thai media that he had signed the Covid-19 Crisis Response Emergency Support Loan Agreement with a JICA representative. Morota Takahiro.

The Royal Gazette announced today that Thailand will borrow a 13 billion baht “emergency support loan” from Japan.

The loan, approved by Cabinet on April 26, is needed to help the country get back on its feet after the economic downturn caused by the Covid-19 pandemic.

The government and the Japan International Cooperation Agency negotiated the 15-year loan at an interest rate of 0.01% per annum. Loan repayments, scheduled for May 20 and November 20 of each year, will be exempt for the first 4 years.

The Front-End-Fee was 0.2% and this payment must be made within 60 days of contract activation.

It is not the first time that a loan has been agreed between the two Asian nations. Prime Minister Prayut Chan-o-cha’s administration has taken out emergency loans worth 1.5 trillion baht between 2020 and 2021.

The public debt ceiling was raised from 60% to 70% of GDP in 2021 and the outstanding amount stood at 60.81% of GDP at the end of April.

The Bank of Thailand’s monetary policy committee says Thailand’s economy is recovering thanks to the recent resurgence in tourism, although it is still far from pre-2020 levels, but inflation is high, which leads to an increase in the cost of living.

But it’s not all bad news as the BOT expects the economy to grow 3.3% this year and 4.2% in 2023. Headline inflation is expected to be 6.2% in 2022 and 2.5% in 2023.

Thailand is unlikely to enter a recession this year, unlike many more developed economies.

THE SOURCE: Thai researcher

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