Thailand is set to lose up to 150 billion baht (4.8 billion dollars) per harvest on the government's scheme of buying rice at inflated prices, the World Bank said. While the international development lender predicted the Thai economy would grow a healthy 4.7 per cent this year as it recovers from the 2011 flooding, the World Bank noted that the government was due to incur huge losses from some of the populist policies that brought it to power in last year's elections.
It said the "paddy-pledging scheme" had proven to be the most costly and should ring up a bill of 115 billion to 150 billion baht per harvest. Thailand's regions harvest rice from one to three times per year. It raised its forecast for Thailand's economic growth this year from a 4.5-per-cent prediction made in May and said it expected 2013 growth to be 5 per cent.
Under the rice scheme, the government pays 15,000 baht per ton of plain, white, unhusked rice and 20,000 baht per ton of jasmine rice. Purchases began in October 2011. The World Bank estimated that the government spent 376 billion baht in purchasing rice crops in the past fiscal year, which ended September 30, and would spend another 450 billion baht this fiscal year, equivalent to 3.8 per cent of gross domestic product.
The government has accumulated more than 12 million tons of rice in warehouses that it has been unable to sell overseas because Thai rice prices are about 200 dollars per ton above international market prices. The government's intervention in the rice market has played havoc with Thailand's private-sector rice exporters, who have seen their shipments fall 40 to 50 per cent this year.