Thai Government trying to shift debt to BOT

The Thai Government has been looking for a way to transfer the country’s debt from the ’97 Asian Financial Crisis to the balance sheet of the Bank of Thailand. Its been going back and forth for the last few days and now it looks like that the idea is scrapped for the time being.

I have no idea whether switching debt from one’s left pocket to its right pocket will really make a difference for the country but it already looks like the THB/USD will weaken in the short term.

The government reason for doing this was to allow to sell more debt to fund the reconstruction from the recent flood crisis without it hitting the debt ceiling imposed post ’97 Asian Financial Crisis.

It’ll be quite interesting to see how things develop from here onwards….

See below from Bloomberg:

Thailand’s government scrapped a proposal to transfer $35 billion of legacy debt from bank bailouts to the central bank and will instead seek to extract cash from commercial lenders to finance flood defenses.

“Transferring debts to the Bank of Thailand will be like printing money,” Finance Minister Thirachai Phuvanatnaranubala told reporters today after meeting Bank of Thailand Governor Prasarn Trairatvorakul. “The methods we are using must not affect fiscal and monetary discipline and must not hurt confidence among foreign investors and international agencies.”

Thailand’s Government Scraps Plan to Transfer Legacy Debt to Central Bank – Bloomberg

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