Bank of Thailand Governor Expands Mandate to Tackle Structural Challenges
New Bank of Thailand Governor Vitai Ratanakorn has announced plans to expand the central bank’s role beyond traditional economic stability, taking direct action to address Thailand’s structural economic challenges and support local businesses.
Key Takeaways
- Central bank to address structural issues like declining productivity and high household debt
- New 100-billion-baht SME loan scheme launching in early 2026
- Northeastern region faces severe economic disparities with 55% household debt surge
- New debt resolution program for small NPL borrowers starts January 1
Governor Vitai, who assumed office on October 1 for a five-year term, stated at a Bank of Thailand seminar that the institution will take a more hands-on approach to tackle persistent structural problems including declining productivity, weakening competitiveness, and high household debt.
“The slowdown in Thailand’s economy and its structural issues require collaboration from all parties to support recovery. The central bank wants to take on a more prominent role in revitalising the economy and supporting Thai people and businesses,” Mr Vitai said.
New SME Support Measures
The central bank plans to introduce a new loan guarantee scheme for small and medium-sized enterprises in early 2026, targeting an expansion of SME lending by approximately 100 billion baht – roughly 5% of the sector’s existing loan portfolio.
This comes as bank loan growth has contracted for 15 consecutive months, with total outstanding loans falling by 1% year-on-year in the third quarter. The SME segment recorded the sharpest decline at 4% contraction in Q3.
“Higher credit risk amid slow economic growth is a major factor dampening SME loan expansion. Targeted measures to support this segment are therefore essential,” Governor Vitai emphasized.
Northeastern Region Challenges
The northeastern region faces particularly severe economic challenges, with household incomes significantly lower than other areas. During 2017-2023, average annual income in the Northeast grew by just 0.6% while household expenses increased by 2%.
Alarmingly, while Thailand’s total household debt rose by 24% over this period, household debt in the Northeast surged by 55%. Despite accounting for one-third of the country’s population, the region contributes only 10% of national GDP.
Falling agricultural prices have further weakened household incomes in the Northeast, where farmers comprise about half of the workforce.
Debt Resolution Initiatives
The central bank has collaborated with the Finance Ministry, Thai Bankers’ Association, and asset management companies to launch a new debt resolution program targeting small NPL borrowers with total debt under 100,000 baht per person, effective January 1 next year.
The program is expected to provide partial relief to indebted households in the Northeast, with the central bank anticipating some borrowers will exit the NPL cycle and return to performing-loan status.
