Thai cabinet approves measures to ease household debt

Thailand's cabinet on December 11 approved debt support measures, including interest suspensions and reduced principal payments, to help tackle household debt, Prime Minister Paetongtarn Shinawatra said.

The measures will support retail borrowers and smaller businesses and solve debt problems in a more tangible and sustainable way, she told a press conference.

The government has been trying to ease Thailand's household debt burden, which it sees as a constraint on consumption and economic growth.

Finance Minister Pichai Chunhavajira told reporters that the cabinet also agreed to let banks pay a reduced annual contribution of 0.23% of their deposits to the Financial Institutions Development Fund (FIDF) for three years.

The reduced FIDF contributions would help banks support debtors, officials have said.

Established in the aftermath of the 1997 Asian financial crisis, the FIDF was designed to provide financial assistance to troubled institutions. By reducing contributions to this fund, the Thai government aims to free up capital for banks to offer more flexible repayment terms to borrowers.

Thailand's Nonperforming Loans (NPLs) hit a three-year high of 2.97% of total outstanding loans in the third quarter of 2024, as small businesses and households continued to face economic challenges. The new measures are expected to benefit approximately 1.9 million borrowers with 890 billion THB (26.28 billion USD) in outstanding loans, allowing them to defer interest payments for up to three years and reduce principal repayments during this period.

Household debt has emerged as a significant drag on Thailand's economic recovery. As of June 30, household debt in Southeast Asia's second-largest economy reached 16.3 trillion THB, equivalent to 89.6% of GDP./.