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Published: Friday January 24, 2014 MYT 4:20:02 PM
Updated: Friday January 24, 2014 MYT 4:21:25 PM

Thai govt seeks go-ahead to raise $4 billion to pay rice farmers

BANGKOK (Reuters) - The Thai government has sought a ruling from an administrative court on whether it can raise 130 billion baht ($4 billion) to pay rice farmers who have been waiting for months for money after selling their grain into a state intervention scheme.

Farmers are blocking provincial roads in protest and some have threatened to travel to Bangkok to join demonstrators who are trying to topple the government.

Prime Minister Yingluck Shinawatra has dissolved parliament and called a snap election for February 2. She now heads a caretaker administration that is not supposed to make decisions that bind the next government.

"On the rice funding, the Finance Ministry just submitted the plan to the Council of State today, which is expected to take time to consider it," Suwit Rojanawanich, an adviser to the ministry's Public Debt Management Office, told Reuters.

"We will have to wait for what the council says before proceeding on anything," he added.

The intervention scheme has run into funding problems because the government has been unable to sell the rice it bought from farmers. It promised them a price well above the market rate, which made the export price uncompetitive.

The government has said it would spend 270 billion baht on the intervention scheme in the crop year from October 2013.

The state farm bank that is managing the scheme, the Bank of Agriculture and Agricultural Cooperatives, has just raised 32.58 billion baht in a bond issue this month. Suwit said the money had been transferred to the BAAC on Thursday.

In November, the bank only managed to raise half of the 75 billion baht bond it offered, so it reopened the bond this month to help get funds to meet late payments to rice farmers.

The rice scheme, which has cost the government billions of dollars, has fuelled the political crisis that is being played out on the streets of Bangkok, with critics saying it is riddled with corruption and a drain on the state budget.

The cost of the scheme has led to a warning from rating agency Moody's and a rebuke from the International Monetary Fund about the fiscal impact.

($1=32.87 baht)

(Reporting by Kitiphong Thaichareon; Editing by Alan Raybould and Alex Richardson)

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