Creditors agree to roll over debt

Creditors agree to roll over debt

BANGKOK (AFP): Thailand's economic chief Supachai Panitchpakdi said yesterday foreign creditors had agreed to roll over more than 50 percent of Thailand's debts due for repayment at year- end.

The rolling over of the massive debts is crucial to Thailand's economic recovery, analysts say, as without a deferral of payment the cash-strapped country could face a devastating moratorium on loans.

"This is the thing to watch," an executive with a western bank told AFP. "If foreign bankers do not roll over their debt, we are heading for a moratorium, which means no new inflow of capital into the system at all."

Bank of Thailand governor Chaiyawat Wibulwasdi said the country's outstanding short-term debt totaled 37 billion dollars as of October.

He added that long- and short-term debts due for repayment over the next 12 months stand at a massive US$39 billion.

Foreign debt repayments due in October stood at seven billion dollars, while those due in November totaled five billion dollars, with a further six billion dollars due in December, Chaiyawat said.

Net repayment in October totaled only $700 million because 80- 90 percent of the debt was rolled over, he said.

Supachai said a crucial fresh roll-over had been agreed upon by foreign creditors, in a move which analysts said would allow the hobbled economy to stagger on.

Foreign investors agreed to extend the deadline for repayment because they "are confident that the government is acting in compliance with the International Monetary Fund's requirements," he said.

Thailand was granted a $17.2 billion IMF rescue deal in August, on the condition that it stick to strict IMF conditions aimed at pulling the economy out of its slump.

But the debt problem continued to worsen Wednesday as the country's currency plunged to new lows, effectively raising the cost of repaying foreign loans.

The stock market also fell slightly, on fears about the high levels of the government and the private sector's foreign debts, which stand at over $100 billion.

Deputy Premier Supachai said the plunging baht should stabilize in the second half of next year, in line with an improvement in foreign capital inflow, as the government tackles economic problems by adhering to the IMF guidelines.

In the near term, the level of the baht is set to improve after the government makes its scheduled December 8 announcement on the future of 58 suspended finance companies, Supachai said.

The unit plunged to an unprecedented low of 42.95 to 43.05 to the dollar Wednesday on fears of a negative contagion effect if embattled South Korea fails to strike a deal with the IMF for its own bailout.

Supachai said the baht has weakened in line with declines in other regional currencies, and rumors of a delay in the procedure for rehabilitating the 58 suspended companies.