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.