Thailand Announces Debt Relief: Millions Get Lower Loan Payments
Bangkok—In a bid to revitalize its economy and address persistently high household debt, the Thai cabinet approved a comprehensive support package for non-bank borrowers on Tuesday. Deputy Finance Minister Paopoom Rojanasakul announced the initiative, targeting individuals struggling with car, motorcycle, and personal loans from non-bank financial institutions. This underscores the government’s growing concern about the burden of household debt, which continues to stifle economic growth in Southeast Asia’s second-largest economy.
The relief package employs a multi-pronged approach. Borrowers will receive a 30% reduction in installment payments, providing immediate budgetary relief. Interest rates on these loans will be reduced by 10% over a three-year period, offering substantial long-term relief. These measures aim to make loan repayments more manageable and prevent borrowers from further accumulating debt.
This assistance program targets specific loan types and amounts, focusing aid on those most in need. Eligible loans include car loans up to 800,000 baht, motorcycle loans up to 50,000 baht, and personal loans with a combined credit limit up to 200,000 baht. A particularly helpful provision allows borrowers with bad loans up to 5,000 baht to settle their obligations by repaying just 10% of the outstanding balance.
To encourage participation from non-bank lenders, the government is providing 50 billion baht in soft loans over the next three years. This financial support will help offset potential lender losses resulting from the reduced payments and interest rates, incentivizing participation in the debt relief program. This public-private partnership is crucial to the initiative’s success and reflects a concerted effort to address the debt crisis.
These measures are not the first attempt to address Thailand’s mounting household debt. As of September 2024, this debt totaled a staggering 16.3 trillion baht, representing a worrying 89% of the country’s Gross Domestic Product (GDP). This places Thailand among Asia’s most indebted nations, highlighting the urgency of the situation. Of this total, 65.4% originated from traditional banks, with the remainder from non-bank lending institutions.
The government acknowledges the severity of the problem. Finance Minister Pichai Chunhavajira previously stated that household debt levels are excessively high and should be reduced to a more manageable 70% of GDP. This ambitious target underscores the administration’s long-term economic vision. The high debt burden significantly impedes economic growth, limiting consumer spending and investment. Bank of Thailand Governor Sethaput Suthiwartnarueput recently projected a potentially sluggish growth rate of 2.9% or less for the current year, partly attributing this to the high debt levels. The new debt relief measures represent a critical step in tackling this economic challenge and paving the way for a more robust and sustainable financial future for Thai households.
