The Finance Ministry has ruled out increasing its share of the financial burden under the government's costly rice-pledging scheme from the current level of 410 billion baht

A Finance Ministry source who declined to be named said the Bank for Agriculture and Agricultural Cooperatives (BAAC) and the Commerce Ministry will themselves have to pay any amount exceeding the budget approved by the cabinet.

However, it is the duty of the Public Debt Management Office (PDMO) to ensure the cabinet-approved level of 410 billion is not surpassed, said the source.

That amount, derived from money borrowed from the BAAC but guaranteed by the PDMO, is part of a 500-billion-baht revolving fund approved by the cabinet to run the scheme, and the state-owned bank must fund the rest itself.

The source said the Commerce Ministry must accelerate releasing rice from the government stockpiles gained under the rice-pledging scheme to repay the BAAC, while the bank must manage its own liquidity to ensure it has enough money to finance the scheme.

The 500 billion baht has been fully spent, while the BAAC has injected another 160 billion into the scheme as requested by the government since the Commerce Ministry could fetch only 120 billion from selling the rice.

The source said even if the Commerce Ministry receives another 40 billion baht from selling the rice by year-end as expected, the amount used to run the scheme will still exceed the 500-billion-baht budget.

It is crucial for the PDMO to limit its burden to 410 billion baht, or else the Finance Ministry will be in danger of missing the 2017 deadline for a balanced fiscal budget, said the source.

The Yingluck Shinawatra administration initiated the rice-pledging scheme to fulfil a campaign promise made during the 2011 general election.

But the programme has been heavily criticised by academics, as the buying price of 15,000 baht a tonne is 40-50% higher than the global market price.

The criticism grew even stronger after the government admitted it was mired in a loss of 136 billion baht from the first year of the scheme.

However, the total loss to date could turn out to be 220 billion baht if the main 2013 crop is taken into account.

The second crop for the 2013 harvest year runs through next month.

In a related development, Supa Piyajitti, deputy finance permanent secretary and chairman of the committee tasked with accounting for the rice-pledging scheme, said programme losses incurred in the first half of this year's harvest season have not yet been determined.

The committee first needs to assess data from the BAAC and the Marketing Organization for Farmers, she said, adding that the data were just received on Friday.

Source: Bangkok Post