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Saturday May 24, 2014 MYT 4:30:01 PM
Saturday May 24, 2014 MYT 4:31:06 PM
BANGKOK (Reuters) - Thailand's military junta and the finance ministry will meet on Monday to discuss how to pay rice farmers over $2.5 billion owed under a failed subsidy scheme run by the government the military overthrew on Thursday.
The Finance Ministry said in a statement on Saturday that Air Chief Marshal Prajin Juntong would meet senior officials from the ministry and from state banks to set out policy. Prajin has taken charge of economic affairs under the military government.
Army chief General Prayuth Chan-ocha, who heads the government, addressed hundreds of civil servants at an army facility on Friday, a day after the army seized power, and told them that paying the farmers was "an urgent issue", according to a source with knowledge of the meeting who requested anonymity
The state rice-buying scheme was one of the key policies in the populist electoral platform that brought ousted premier Yingluck Shinawatra to power in 2011. It was criticised by opponents who played a role in driving her from office for running up huge losses and being riddled with corruption.
Two weeks ago Thailand's anti-graft agency indicted Yingluck for negligence for charges related to the rice-subsidy scheme, one of several policies that won the support of Thailand's poor for both Yingluck and her brother, Thaksin Shinawatra, before her.
Thaksin, a billionaire telecommunications tycoon turned politician, earned the loathing of the royal establishment and was himself ousted in a military coup in 2006.
Yingluck's rice-buying scheme paid millions of rice farmers way above the market price for their grain.
The scheme boosted rural incomes but made it impossible for the government to sell the rice on the export market without incurring big losses. Thailand was left sitting on millions of tonnes of rice stockpiles.
Yingluck's administration had hoped limited supply from what was then the world's top rice exporter would drive up global prices and eventually allow international sales at a profit.
The gambit failed as India and Vietnam exported millions of tonnes more rice to plug the gap. The Thai scheme ran into funding problems that were exacerbated by the government's inability to access funds from the state budget from December.
Facing a wave of anti-government protests, Yingluck dissolved parliament in December, called an election and ran a caretaker administration with limited fiscal powers.
Protesters disrupted the February vote, which was subsequently annulled, leaving Thailand without a fully functioning government until the army seized power on Thursday.
Prayuth suggested on Friday he would be able to tap the state budget for funds to pay the farmers.
"The budget office reported that there is about 40 billion baht ($1.23 billion) in the central budget that can be used to pay farmers," the source quoted Prayuth as saying.
"Some are offering another 50 billion baht in loans," Prayuth added. "This should be sufficient to pay for farmers."
That was an apparent reference to possible loans from banks. Commercial and state banks proved unwilling to lend to the Yingluck administration, worried about the legitimacy of such borrowing by a caretaker government and possible law suits.
At the end of April, farmers were still owed an estimated 90.5 billion baht. Some have been waiting since late last year for rice sold to the state from the crop harvested from October.
Prayuth was reported as saying all farmers could be paid within 20 to 25 days.
Air force chief Prajin, who was already chairman of national flag carrier Thai Airways International, will oversee the ministries of commerce, industry, agriculture, energy, labour and transport as well as finance.
($1 = 32.5950 Thai Baht)
(Reporting by Khettiya Jittapong; Writing by Alan Raybould; Editing by Simon Webb & Kim Coghill)
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