The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is poised to request a 186-billion-baht budget from the new administration for the 2015 fiscal year to compensate for losses incurred from all populist policies of previous governments, its chief says.
Of the total, 150 billion baht will be used to repay the Yingluck Shinawatra administration's rice-pledging scheme, 30 billion is for the Abhisit Vejjajiva government's farmer income guarantee scheme and the remainder is for other populist projects including the debt suspension for farmers initiated by ousted premier Thaksin Shinawatra.
The farmer's bank only expects to receive half that amount, as was the case with the 2014 fiscal budget, said president Luck Wajananawat.
Even though 2015 fiscal budget approval is highly likely be delayed for months due to the absence of a functioning government, it should not affect the bank's liquidity, which now has a surplus of around 200 billion baht, he said.
The fiscal year runs from Oct 1 to Sept 30.
A source at the bank said the rice pledging scheme has created the most losses of all the populist policies sponsored by previous administrations.
Before the Yingluck Shinawatra government took the helm in the third quarter of 2011, the debt burden from the previous government's rice intervention programmes amounted to 130 billion baht, but that burden has declined as the Yingluck administration took most of the budget for the rice pledging scheme.
For fiscal year 2014, the government approved an 82-billion-baht budget to pay the debt for populist policies managed by the BAAC, 62 billion of which was used to pay debt incurred from the rice pledging scheme alone.
Unlike rice subsidies in the past, the rice pledging scheme, the main campaign promise that helped sweep Ms Yingluck to power, saw the government buy every single grain at the pledged prices, which were 40-50% higher than market prices. The grain was then hoarded in warehouses in the hope that global prices would increase significantly when a large supply was removed from the market. But a glut of rice from other producers saw that strategy spectacularly backfire.
The Yingluck government has spent over 800 billion baht to fund its pledging programme since it began in October 2011, and it is still keeping its lips shut on the scheme's official losses.
Recently a subcommittee overseeing the accounting for the pledging scheme, led by Finance Ministry deputy permanent secretary Supa Piyajitti, said that losses from the scheme for the three crops through the 2012-2013 main crop amounted to 220 billion baht and could reach 400 billion baht if the two crops through the 2013-2014 main crop are included.
The Yingluck government is months behind in its pledging payments to farmers for the 2013-2014 main crop. The caretaker government has limited borrowing authority so it does not run up a big debt for the next government, while rice sales by the Commerce Ministry were insufficient to pay for the pledges.
As of April 29, some 99.5 billion baht had been paid to farmers, leaving 100 billion baht unpaid.