## Thailand Can Ease Household Debt Burden by Using Coordinated Approach

_IMF News, April 9, 2025_

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## Bibliographic details
- Authors: Corinne Deléchat
- Published: April 9, 2025

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### Overview
- Thailand’s household debt remains historically high at 89 percent of economic output.
- Elevated household debt contributed to delaying Thailand’s post-pandemic recovery relative to other economies in the region.
- Borrowing surged during the health crisis as people struggled to meet basic needs; lingering repayment burdens continue to constrain consumer spending, investment, and the economy more broadly.
- Durably reducing household debt requires combining steps to lower the stock of existing obligations with policies to prevent the buildup of new borrowing.

### Case studies and international experience
- Brazil:
  - Program ran between July 2023 and May 2024.
  - Helped more than15 million people renegotiate loans worth 52 billion reais, or about 0.5 percent of gross domestic product.
  - Approach: renegotiate at a discount, settle debts, provide renewed access to credit with private lenders and minimal government spending.
- Malaysia:
  - After the 2008 global financial crisis, introduced responsible lending guidelines, risk-informed loan pricing, and stricter credit card requirements to address personal loans and credit card debt involving non-bank financial institutions.
- Korea:
  - Took over a failing credit card company and provided several ways for borrowers to resolve debts.
  - Result: reduced the credit card delinquency ratio by three-quarters over four years through 2006.
- Ireland and the United States:
  - Used relatively simple and fast debt settlement and bankruptcy options to help struggling borrowers.
- Emerging economies (examples given):
  - Croatia and the Czech Republic used debt relief and forgiveness to help the most vulnerable debtors.

### Thailand: measures taken to reduce household debt
- Government and authorities’ actions:
  - Khun Soo, Rao Chuay (You Fight, We Help) program introduced in December 2024:
    - Provides individuals and small businesses with lower monthly payments, interest suspension and forgiveness, and loan restructuring.
  - Bank of Thailand guidelines set in January 2024 to ensure responsible lending:
    - Strengthened consumer protection.
    - Helped restructure more than 7 million accounts.
  - Other measures: limits on borrowing relative to assets.
  - Financial education: government working with schools to require financial education.
  - Suggested actions for financial institutions: provide better information to borrowers and offer debt help programs.
- Additional policy priorities identified:
  - Make it easier for borrowers in default to regain access to formal bank loans.
  - Create socially acceptable bankruptcy systems that are simple, effective, and fair.
  - Prioritize the most vulnerable households and collaborate with private companies to reduce the cost of tackling persistent and non-viable debts.

### Policy recommendations and cautions
- Combine debt-reduction measures that lower the stock of obligations with policies preventing excessive new borrowing.
- Target assistance to the most vulnerable households while coordinating with private lenders to limit fiscal costs.
- Improve financial literacy and limit aggressive credit card marketing to prevent excessive borrowing.
- Ensure policies are balanced to safeguard economic stability:
  - Acting too quickly, without attention to economic interconnections, can hurt the banking sector, reduce credit availability, and slow consumer spending and business investment.

### Structural drivers and broader reforms
- More than half of workers aren’t formally employed, reducing job security and social protection.
- High informality makes households particularly vulnerable to shocks, increasing reliance on borrowing to meet basic needs.
- Strengthening social protection would help reduce inequality and curb household debt, especially informal loans, thereby mitigating financial stability risks.

*By Corinne Deléchat, Seunghwan Kim, Ying Xu; April 9, 2025*

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## References

- [THAILAND AND THE IMF](https://www.imf.org/en/Countries/tha)
- [STAFF REPORT](https://www.imf.org/en/Publications/CR/Issues/2025/02/20/Thailand-2024-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-562284)
- [THAILAND: SELECTED ISSUES](https://www.imf.org/en/Publications/CR/Issues/2025/02/20/Thailand-Selected-Issues-562289)
- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2025/04/09/cf-thailand-can-ease-household-debt-burden-by-using-coordinated-approach_