NESDC urges BOT to launch urgent measures to address rising household debts, NPLs
The National Economic and Social Development Council (NESDC) is calling for financial interventions to bolster Thailand’s economy in response to escalating household debts and rising non-performing loans (NPLs) among small and medium-sized businesses.
Danucha Pichayanan, NESDC’s secretary-general, highlighted the pressing need for action, citing troubling economic indicators that underscore underlying structural issues within the economy. Of particular concern is the rising level of debt, notably among households and SMEs, coupled with a worrisome uptick in NPLs within the banking sector.
Despite the government’s implementation of various fiscal measures, including incentives for tourism, new investments and budget acceleration initiatives, the NESDC contends that further financial interventions are imperative, especially since the government’s fiscal arsenal nears depletion.
“Financial measures must take precedence in revitalising the Thai economy, with a focus on alleviating the burden on households and SMEs,” Danucha said.
He also emphasised the importance of tailoring measures to address the specific needs of these vulnerable sectors, including potential adjustments to interest rates aimed at narrowing interest differentials and preventing a surge in debt levels.
“There must be specific measures to look at, so lower interest rates do not lead to more debt,” Danucha warned.
He also stressed the importance of reassessing measures related to credit card debt repayment, particularly given the reliance of many SMEs on credit cards for their business operations.
While temporary relief measures were implemented during the Covid-19 pandemic, such as reducing the minimum credit card payment to 5%, these initiatives came to an end in December and were adjusted to 8% in January.
“Regarding interest rates, the NESDC defers to the Bank of Thailand to determine the appropriate timing for adjustments. However, if it does this swiftly, there should be a potential positive impact on economic recovery,” he said.
