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Published on March 26, 2008

Critics warned that taxpayers would ultimately have to foot the bill for such populist policies.

Spending of Bt75 billion has been committed so far by the government to stimulate the economy, including tax breaks and other measures worth Bt42 billion announced earlier.

Finance Minister Surapong Suebwonglee said the government would allocate Bt18 billion to villages nationwide next month, with small villages getting Bt200,000 each, medium-sized villages Bt300,000 and large villages Bt350,000. The Government Savings Bank will also lend up to Bt5 billion to a micro-credit scheme known as the People's Bank, charging a monthly interest rate of 0.75 per cent for a one-year contract.

He said all self-employed and low-income groups were eligible to apply for the loans, aimed at around 250,000 households.

In addition, the Government Housing Bank will provide low-interest loans worth up to Bt10 billion for low-income borrowers to buy homes, with fixed rates of seven and 10 years.

Only borrowers with a salary of less than Bt15,000 a month will be eligible for a maximum Bt600,000 mortgage at an interest rate of 4 per cent in the first seven years, after which the minimum retail rate minus 0.5 per cent will be charged.

The Bank for Agriculture and Agricultural Cooperatives will also propose a debt moratorium for farmers costing about Bt13 billion, said Surapong.

Narong Phetprasert, an economist at Chulalongkorn University, said the government had missed the target because fewer people now lived in villages as many had moved to Bangkok and other big cities.

Sompop Manarungsan, also of Chulalongkorn University, said taxpayers would eventually have to pay for these populist schemes, adding that the debt moratorium might not be needed as farm prices increase.

Wichit Chaitrong

The Nation