News Forum - Thailand goes cap in hand to Japan for emergency support loan

[Thaiger]

Thailand has returned to Japan cap in hand and asked for yet another emergency bailout. The Royal Gazette today announced Thailand will borrow an “emergency support loan” of 13 billion baht from Japan. The loan, approved by the Cabinet on April 26, is needed to help ease the country back on its feet after the economic downturn caused by the Covid-19 pandemic. The government and Japan International Cooperation Agency negotiated the 15-year loan at an interest rate of 0.01% per year. The loan repayment, scheduled for May 20 and November 20 of every year, will be exempted for the first […]

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[BigHewer]

Very silly move to borrow from Japan when the yen is at its lowest ebb in years, even with the negligible interest rate. 

[Dancbmac]

3 minutes ago, BigHewer said:

Very silly move to borrow from Japan when the yen is at its lowest ebb in years, even with the negligible interest rate. 

Possibly better than borrowing from China like Laos has done???  Hard to say without knowing all the details.

[BigHewer]

Just now, Dancbmac said:

Possibly better than borrowing from China like Laos has done???  Hard to say without knowing all the details.

Definitely better than that. Not much would be worse, mind.

[TheDirtyDurian]

That's worrying. 13 billion baht is not that much money in country terms. 

Is Thailand that skint?

$383m is not a lot of money. 

[palooka]

The public debt ceiling was increased from 60% to 70% of GDP in 2021 and the outstanding was at 60.81% of the GDP as of the end of April.

 the BOT expect the economy to expand by 3.3% this year and by 4.2% in 2023. 

Debt increased in 2021. but they managed to reduce GDP by over 9%  in the 16 months since, when the economy was expanding at less than 3%, with stuff all tourism plus they were borrowing to pay for Covid. 

Someone is telling porkies I'm thinking, or they are financial geniuses.

 

 

[Rainmaker]

Okay. I know that I am a easy target. So I hope that I don’t get attacked.  But I do have the facts.  So in 2008. There was a housing crisis and a bank crisis. The United States passed a bill called Tarp. (Troubled Asset Relief Program ) It was for the government to purchase toxic assets and equity from financial institutions to strengthen its financial sector. So it was not just American banks that got money from the USA. World banks got money. Japan has gotten money and they have even gotten more money because they have been in financial trouble for a long time and it’s not going to improve. I will include one story from Reuters. But there’s many stories.  So Thailand is borrowing money from Japan which is in financial trouble and they are getting money from the USA which is in a high inflation rate now and it’s not looking good. I know that this Great Reset that is being pushed by the World Economic Forum is a good thing for Japan. I believe they are willing to do this Great reset to be bailed out.  So if you don’t know anything about the great reset. Please research it. In simple layman terms. It’s a reboot for the global economy and a world currency and eliminate past debt and every country will be on the same playing field. And all these big billionaires will take care of everyone. So I am only speaking to warn everyone to be prepared for what might happen very soon. The United States is going to get very bad financially before the fall season. If you don’t believe me. I don’t care. A lot of people don’t know what is happening in the world because majority of the people live in a cave and only have one news source and they believe everything that they are told. 

[Dancbmac]

58 minutes ago, palooka said:

The public debt ceiling was increased from 60% to 70% of GDP in 2021 and the outstanding was at 60.81% of the GDP as of the end of April.

 the BOT expect the economy to expand by 3.3% this year and by 4.2% in 2023. 

Debt increased in 2021. but they managed to reduce GDP by over 9%  in the 16 months since, when the economy was expanding at less than 3%, with stuff all tourism plus they were borrowing to pay for Covid. 

Someone is telling porkies I'm thinking, or they are financial geniuses.

Usually governments vote to increase debt ceilings, or the country”s credit limit, and that does not mean they actually accumulate that amount of debt.  Similar to a credit card in which one has a credit limit and can borrow up to that limit.  Most folks will borrow and carry a balance, but usually not up to the credit limit.  So doubt the government reduced the 9% figure when the economy sucked the past couple of years.

[JJJ]

The government can’t raise funds in Thai baht because the economy is so weak. Foreigners don’t want to lend in Thai baht.

Typically foreign funding is done in USD but they are clearly worried about further THB weakening. JPY funding is seen as a little more stable because Japan is unlikely to hike their rates aggressively meaning the currency rate exchange won’t change much.  The money isn’t going to investment programs—rather it’s being wasted on social transfers

Rather than falling into this debt hole, the government could take actions (or have taken actions earlier) to grow the economy—particularly exports. Tourism is a foreign export and one of—if not—the the largest exports Thailand has. Yet the government did nothing to promote tourism when they could have. 

The current economic problems in Thailand are largely self made problems from bad policy and clueless leadership. 

[Fanta]

3 hours ago, Thaiger said:

the 15-year loan at an interest rate of 0.01% per year.

I don’t know anything about International loans but this looks hell cheap.  Is it? 

[Haole.TH]

Yet, earlier this week the Thai Gov debated the 2023 budget with little thought in mind for this JPY loan. 

Most responsible people cut their expenses when money gets tight - austerity measures.  This Thai Gov just keeps on spending - new aircraft and submarines (do they have engines yet??).

[BigHewer]

2 hours ago, Fanta said:

I don’t know anything about International loans but this looks hell cheap.  Is it? 

It looks too good to be true, and that’s because it is. It is very low, and Japan will not raise interest rates anytime soon. But the yen is likely to be significantly stronger over the course of the loan repayments. Based on historical rates, at least 10-15% higher than the current historical low. 

[Chatogaster]

2 hours ago, Fanta said:

I don’t know anything about International loans but this looks hell cheap.  Is it? 

You may want to look at the JPY to THB exchange rate for the past decade and the timing of the current loan (spoiler alert: it couldn't be worse). Next, consider what, when and for how long needs to happen wrt the rates to make this loan cheap in the end. It's not hard to arrive at the conclusion that Thailand needs a humongous amount of good luck to come out on top.

[AdvocatusDiaboli]

They don’t need this loan, as they won’t be buying China’s submarines with Chinese made engines.

[BBY]

One does have to ask why the Thai Bht remains at its current value. 

[DiJoDavO]

Why spending money on expensive unimportant stuff like submarines, then beg for money from other countries?

[Cabra]

Why not get the $13 billion baht from Rama X