(Bloomberg) -- Thailand’s government will don the role of a mediator to resolve the menace of informal household debt that’s holding back the progress of Southeast Asia’s second-largest economy, according to Prime Minister Srettha Thavisin.
Debtors can approach mediation centers all over the country from Dec. 1, with local government officials and police officers assisting registration of informal debt and devising strategies to resolve disputes fairly between borrowers and lenders. Srettha said an official estimate of informal household debt at 50 billion baht ($1.4 billion) was probably too low and the “chronic” nature of the problem meant it can’t be solved without government intervention.
Household debt in Thailand is among the highest in Asia, peaking at 96% of gross domestic product in 2021 before easing to about 91% now. Bank of Thailand Governor Sethaput Suthiwartnarueput said on Tuesday that household debt remains the most worrisome problem and “very challenging” to solve.
Read More: Why Thais Have Such a Debt Problem and Why It’s Risky: QuickTake
Srettha depicted informal debt as a form of “modern-day slavery,” which not only affects individuals but also undermines Thailand’s economy and triggers social problems.
“It takes away the independence and dreams of people in this era,” Srettha said. “This problem is too chronic and too big to solve without the government as a middle man.”
Srettha said he will unveil additional measures to lower household debt taken from formal financial channels within two weeks. His government is planning to handout 10,000 baht each to about 50 million adult Thais 16 years or above next year to stimulate the economy that’s lagged the growth rate of regional peers in recent years.
Thailand’s economy grew 1.5% in the third quarter, the slowest expansion this year and below a 2.2% median estimate. That prompted Srettha to say that the economy was in a “crisis” and warrants a large dose of stimulus.
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