Tags: Thailand | rice subsidy | Yingluck Shinawatra

Thailand Rice Subsidy Program Linked to Run on Bank

By    |   Monday, 17 Feb 2014 06:51 PM

Depositors have withdrawn almost $1 billion from a Thailand bank connected to a troubled government rice subsidy program — another indication that months of political turmoil are taking their toll on the national economy, The Wall Street Journal reported Monday.

Adding to the pressure on Prime Minister Yingluck Shinawatra, the National Economic and Social Development Board, a government agency, reported that the rate of growth of Thailand’s gross domestic product fell from 6.5 percent in 2012 to 2.9 percent last year.
The economy grew at a 2.7 percent rate in the third quarter of 2013, falling to 0.6 percent in the fourth quarter.

The board forecast that Thailand’s economy would bounce back and that the nation’s GDP will grow at a 3 to 4 percent rate this year. But Monday’s news that depositors have withdrawn the equivalent of $930 million from Government Savings Bank (GSB) during the previous 72 hours appeared to signal that the economy faces difficult times, amid a political crisis that shows no signs of easing.      
  
Woravit Chailimpamontri, the bank’s chief executive,  said the depositors pulled their money out after the  GSB extended a loan worth about $155 million to Bank for Agriculture and Agricultural Cooperatives (BAAC), a government agency that oversees the rice subsidy program.

The program, which purchases rice from farmers for up to 50 percent above the market price, has drawn fire from protesters who have taken to the streets since November calling for the resignation of Prime Minister  Yingluck Shinawatra and her Pheu Thai Party.

The protesters claim the subsidies are an example of destructive populist policies that the prime minister has pursued to win the support of rural voters while weakening the national economy.

Observers  say the Yingluck government had two major goals in enacting the rice subsidies: One was to appeal to rural voters; the other was to corner the international market for rice sales.

But the program has not worked out as supporters had hoped. Burmese smugglers, with little fear of being caught, have been able to sell rice to the Thai government for close to double the local price. Meanwhile, Thai taxpayers are out billions of dollars, while millions of tons of unsold grain have piled up in state warehouses.

In addition, Vietnam and India have overtaken Thailand as the world’s top rice exporters,  The London Telegraph reported.

The Yingluck government has struggled in recent weeks to secure loans from commercial banks to pay  rice farmers, who are demanding payment for grain they have already turned over to the government. 

As the withdrawals at GSB have mounted, Woravit said the bank would not extend further loans to the BAAC.

After dissolving parliament in December in a bid to ease tensions, Yingluck now governs in a caretaker capacity without the power to make major decisions about government spending.

Major investors such as Toyota Motor Corp. have warned that future investments in Thailand  could be jeopardized if the political situation  is not stabilized soon.

Related Stories:

© 2017 NewsmaxWorld. All rights reserved.

 
1Like our page
2Share
Asia
Depositors have withdrawn almost $1 billion from a Thailand bank connected to a troubled government rice subsidy program — another indication that months of political turmoil are taking their toll on the national economy, The Wall Street Journal reported Monday.
Thailand,rice subsidy,Yingluck Shinawatra
512
2014-51-17
Monday, 17 Feb 2014 06:51 PM
Newsmax Inc.
 
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
© Newsmax Media, Inc.
All Rights Reserved