Thailand to issue bonds to resolve 1997 financial crisis debts

Asian Economic News, June 24, 2002

BANGKOK, June 21 Kyodo

Thailand's cabinet approved Friday a plan to issue bonds totaling 780 billion baht (about $18.5 billion) to resolve debts incurred during the 1997 financial crisis.

Bank of Thailand (BOT) Governor Pridiyathorn Devakula told a news conference held after the cabinet decision that 300 billion baht of savings bonds, with maturities of five, seven and 10 years, will be offered to the public from July 15 to Aug. 30. The remaining bonds will be issued in 2004 and 2006, he added.

Pridiyathorn said the bonds will help resolve outstanding losses of more than 1.4 trillion baht shouldered by the BOT's Financial Institutions Development Fund (FIDF) since the crisis.

The FIDF losses have already been partially fiscalized by the issuance of 500 billion baht worth of government bonds in 1998.

Thai Finance Minister Somkid Jatusripitak told the same news conference the government agreed Friday to issue an executive decree to allow the central bank to transfer 165 billion baht in surplus funds to help pay the debt.

The use of profit flows from the BOT's currency reserve will not affect the levels of international reserves, according to the central bank governor.

The bond issue will not adversely affect the ratio of public debt to the country's gross domestic product, which is currently below 60%, according to the ministry officials.

Pridiyathorn emphasized that the central bank will not print new banknotes, saying there is surplus liquidity in the Thai economy.