Set-back for rice policy critics! Standard & Poor says policy not hurt Thai credit rating


As Thai Intel have been saying and saying, global and local press have mostly gone extremist negative in its Thai rice coverage, ignoring even the World Bank, saying the policy benefited farmers and stimulated the economy, while the loss, are mostly book lost, in terms of rice stock that is un-sold, which is in the process of being sold, and thus the loss is being reduced. However, most local and global press, link the book loss to the amount of funds that is used in the policy, to for years and years, been saying the rice policy, will hurt Thailand’s credit rating. As Thai Intel have noted before, the rice policy, is hurt mostly from politics, old stake-holders and the local and global press, in that the three factors have combined force and went after the rice policy, with many “Dirty Tactics” such as deliberately, non-factual, destroying Thai rice quality reputation. The policy is flawed of course, in that after all is said and done, taking in to account those “Dirty Tactics” means the policy is not sustainable, in the long-run. many have recognized the benefit of the scheme, and have recommended the Yingluck government make adjustments, to make the scheme sustainable. Some adjustments to that effect have been made. Yingluck now face termination from office from the policy, charged by the highly politicized anti corruption unit, over the rice policy. Control of Thailand’s rice business, and the vast profit, now is on the verge of reversing back to the old-stake-holder, namely the so called, “Five Tigers” of Thai rice exporter, long a monopoly.

The Bangkok Post reports:

The rice-pledging scheme on its own will not have a significant impact on the sovereign credit quality of Thailand, according to a report published today by Standard & Poor’s Ratings Services. Standard & Poor’s does not expect to lower the BBB+ sovereign rating of Thailand because of the cost of the rice-subsidy scheme, the report said. “Thailand’s fiscal and debt metrics can accommodate the likely losses from the rice-pledging scheme, and will remain comfortably in the ranges commensurate with the current rating,” said Standard & Poor’s credit analyst Agost Benard. In its base-case scenario, the rating agency projected that general government fiscal deficits will average 0.7% of GDP in 2013-2016, while general government debt as a percentage of GDP will rise by an average of 3% annually over the period. As a result, Standard & Poor’s estimates that net general government debt will reach a still-moderate 25% of GDP. The ratings service said the rice-subsidy scheme in its original form exposed the government to large losses from buying the country’s rice crop at a guaranteed price. The current version however, caps losses by limiting the amount of support per farming household, it said. Implementation of the scheme has also stalled due to the country’s ongoing political stalemate, the report said, adding that the future course of the scheme will depend on resolution of the current political impasse and the makeup of the next government.

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