The AMC will purchase non-performing loans (NPLs) from Thai banks still reeling from the 1997-1998 financial crisis. As a result, banks will have cleaner balance sheets allowing them to start lending again, hopefully, this time to quality borrowers.
Following the Asian financial crisis, South Korea, Indonesia, and Malaysia established their own AMCs specifically to support the banking sector.
In a related development, Dr. Somkid has said he will initiate measures to stimulate the economy and prop up declining exports. Short-term measures are needed to maintain growth, foremost of which is boosting consumption. According to Dr. Somkid, the National Economic and Social Development Board has shown him several consumption-boosting options, but he has yet to reveal details pending a final proposal to the cabinet.
For the first time in three year, preliminary government reports reveal a trade deficit of $300-400 million in January. The prime culprit is the slowing US economy, which has caused a slowdown in electronics exports.
