Ghost of 13 years past
The forgotten debt of the 1997 Asian Financial Crisis and how to deal
with it
By Jon Fernquest 
Most people have
long forgotten the 1997 Asian Financial Crisis of 13 years ago.The debt incurred by the Thai government to fix the broken financial system back in 1997, however, still exists.
This huge, but not much talked about debt, is currently managed by the FIDF, an organisation belonging to the Bangkok of Thailand.
In retrospect, the big hullabaloo and celebration surrounding Thaksin's paying off the last of IMF debt back in 2003 seems to have been a bit premature (See NY Times article).
Thailand's current Finance Minister Korn Chatikavanij, aided by his background in investment banking, has proposed a way to partially alleviate the problem.
This is the subject of today's article which begins after the vocabulary:
incur - do
something so that you owe money to another person, or do something to
lose money (examples: incur charges, incur costs, incur a debt, incur
an expense, incur a loss)
debt incurred - money that you began owing someone
Financial Institutions Development Fund (FIDF) - the fund under the central bank responsible for bailing out banks and other financial insitutions after the 1997 financial crisis (See fiscalizing FIDF's losses)
in retrospect - looking back on the past from the future (after the events have occurred with the "benefit of hindsight" you already know what happened)
a big hullabaloo - a lot of excitement and talk about an event, noise made by excited or angry people
premature - too early
background - the knowledge and experience that a person has in a subject or dealing with a particular kind of problem
investment banking - the banking function that provides finance for companies by buying their shares and selling them to the public (IPO), also advise on takeovers and mergers
(See Wikipedia)
partially - achieve part of the goal, not the whole goal (not complete)
alleviate a problem - make a problem less severe and painful
debt incurred - money that you began owing someone
Financial Institutions Development Fund (FIDF) - the fund under the central bank responsible for bailing out banks and other financial insitutions after the 1997 financial crisis (See fiscalizing FIDF's losses)
in retrospect - looking back on the past from the future (after the events have occurred with the "benefit of hindsight" you already know what happened)
a big hullabaloo - a lot of excitement and talk about an event, noise made by excited or angry people
premature - too early
background - the knowledge and experience that a person has in a subject or dealing with a particular kind of problem
investment banking - the banking function that provides finance for companies by buying their shares and selling them to the public (IPO), also advise on takeovers and mergers
(See Wikipedia)
partially - achieve part of the goal, not the whole goal (not complete)
alleviate a problem - make a problem less severe and painful
Economics
PUBLIC FINANCE
Korn wants solutions for FIDF debt and B65bn interest
6/03/2010Wichit Chantanusornsiri
The government must move quickly to restructure the outstanding debt of the Financial Institutions Development Fund, as interest costs alone run at 65 billion baht per year, says Finance Minister Korn Chatikavanij.
Deputy Premier Trairong Suwannakhiri has held talks with the Bank of Thailand about the 1.1 trillion baht in debt held by the FIDF to help reduce the burden on the annual budget.
public finance - government
finance, teh economics of taxation and government spending (See Wikipedia)
debt - an amount of money that you owe หนี้
interest - payments made for the use of another's money for a period of time
principal - an amount of money loaned to others or invested in a business in exchange for regular interest payments (total amount paid back to lender from borrower = interest + principal)
pay interest on principal - when the borrower pays the lender interest for the opportunity to use their money
restructure - to organise something such as a company in a different way so that it will operate better ปรับโครงสร้างใหม่
outstanding - still exists, not finished, not paid yet
talks - negotiations, formal discussions of problems between different sides in a conflict in order to solve the problem
burden - a serious or difficult responsibility that you have to deal with ภาระ a difficult thing that must be done, a heavy load to carry (See glossary)
annual - happening once a year ประจำปี
budget - the amounts of money that an organisation has available to spend on different things during a period (See Wikipedia) งบประมาณ the plan for spending during a period of time within a company or organization
debt - an amount of money that you owe หนี้
interest - payments made for the use of another's money for a period of time
principal - an amount of money loaned to others or invested in a business in exchange for regular interest payments (total amount paid back to lender from borrower = interest + principal)
pay interest on principal - when the borrower pays the lender interest for the opportunity to use their money
restructure - to organise something such as a company in a different way so that it will operate better ปรับโครงสร้างใหม่
outstanding - still exists, not finished, not paid yet
talks - negotiations, formal discussions of problems between different sides in a conflict in order to solve the problem
burden - a serious or difficult responsibility that you have to deal with ภาระ a difficult thing that must be done, a heavy load to carry (See glossary)
annual - happening once a year ประจำปี
budget - the amounts of money that an organisation has available to spend on different things during a period (See Wikipedia) งบประมาณ the plan for spending during a period of time within a company or organization
The liabilities, which stem from the fund's bailout of bankrupt banks and finance companies during the 1997 crisis, were later made the responsibility of the government with costs to be ultimately carried by the central bank.
Regulators are currently considering several options to help reduce the carrying cost of the debt, including refinancing FIDF bonds with the issue of zero-coupon bonds to be sold directly to the central bank, an option that would essentially cut interest expenses to zero.
liabilities
- debts, the amount of money that a company owes to
others หนี้สิน, หนี้ขององค์กร money borrowed by a company (liabilities
+ owners' equity = assets)
X stems from Y - X is caused by Y
bailout - help by giving money to prevent failure and bankruptcy ช่วยไม่ให้ธุรกิจล้มละลาย (See glossary)
bankrupt - when business is bad, debts cannot be paid, and business cannot operate anymore, assets are sold off by a court (liquidation) (See Wikipedia)
finance - to provide money for something จัดหาเงินทุนให้
crisis - an urgent, difficult or dangerous situation วิกฤต
responsibility - having to take care of some task as part of your job
ultimately - finally, in the end, after a series of things have happened ท้ายที่สุด, ตอนสุดท้าย, ในที่สุด
central bank - the main bank in a country that controls the supply of money in the economy and provides financial services to the government and other banks (See Wikipedia)
options - choices ทางเลือก, ตัวเลือก
considering several options - thinking about which option (of several options) to choose
carrying cost of debt - when people borrow money and get a loan the money they pay as interest and other charges
refinancing - borrowing money at a lower rate of interest in order to pay off a debt or loan (thus saving money in the future)
bonds - an agreement by a government or an organization to pay back money that an investor has lent plus a fixed amount of interest by some date in the future (See Wikipedia)
zero-coupon bonds - "a bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond" (See Wikipedia)
issue - offering securities (stock shares, bonds) for sale
essentially - for the most part ที่สำคัญที่สุด
cut interest expenses to zero - refinance so no longer have to pay interest on principal
X stems from Y - X is caused by Y
bailout - help by giving money to prevent failure and bankruptcy ช่วยไม่ให้ธุรกิจล้มละลาย (See glossary)
bankrupt - when business is bad, debts cannot be paid, and business cannot operate anymore, assets are sold off by a court (liquidation) (See Wikipedia)
finance - to provide money for something จัดหาเงินทุนให้
crisis - an urgent, difficult or dangerous situation วิกฤต
responsibility - having to take care of some task as part of your job
ultimately - finally, in the end, after a series of things have happened ท้ายที่สุด, ตอนสุดท้าย, ในที่สุด
central bank - the main bank in a country that controls the supply of money in the economy and provides financial services to the government and other banks (See Wikipedia)
options - choices ทางเลือก, ตัวเลือก
considering several options - thinking about which option (of several options) to choose
carrying cost of debt - when people borrow money and get a loan the money they pay as interest and other charges
refinancing - borrowing money at a lower rate of interest in order to pay off a debt or loan (thus saving money in the future)
bonds - an agreement by a government or an organization to pay back money that an investor has lent plus a fixed amount of interest by some date in the future (See Wikipedia)
zero-coupon bonds - "a bond that is issued at a deep discount from its value at maturity and pays no interest during the life of the bond" (See Wikipedia)
issue - offering securities (stock shares, bonds) for sale
essentially - for the most part ที่สำคัญที่สุด
cut interest expenses to zero - refinance so no longer have to pay interest on principal
A second option, one that would require amendments to the BOT Act, would be to consolidate the central bank's accounts to open the door for excess reserves to be applied against the debt.
Mr Korn said the central bank's reserves were now at an all-time high, and that it remained questionable whether the funds were being used to maximum efficiency.
amendments - changes
to a law
BOT Act - the law that says how the Bangkok of Thailand must operate
consolidate - combine many into one รวมเป็นหนึ่ง
accounts - the accounting records of a company, the records of money paid, received or owed over a period of time by a company
open the door for Y - allow or provide an opportunity for Y to happen
excess - greater than is usual; too much of something มากเกินปริมาณที่พอดี
reserves - the amount of foreign currency or gold held by a national bank, which is used for dealing with the national banks of other countries เงินสำรอง
questionable - involving doubts about whether something has been done properly ที่น่าสงสัย
funds - money available to spend on something เงินทุน
maximum - the most possible ที่สูงสุด ที่มากที่สุด
efficiency - waste little time, energy and resources in doing a task (minimize time, energy and resources in performing a task) (See glossary) การทำงานอย่างมีประสิทธิภาพ คุ้มค่าเวลาและใช้พลังงานหรือต้นทุนในการผลิตน้อย เพื่อให้ได้ผลผลิตมาก, doing a task well without wasting time, money, resources, getting a lot done with limited resources
BOT Act - the law that says how the Bangkok of Thailand must operate
consolidate - combine many into one รวมเป็นหนึ่ง
accounts - the accounting records of a company, the records of money paid, received or owed over a period of time by a company
open the door for Y - allow or provide an opportunity for Y to happen
excess - greater than is usual; too much of something มากเกินปริมาณที่พอดี
reserves - the amount of foreign currency or gold held by a national bank, which is used for dealing with the national banks of other countries เงินสำรอง
questionable - involving doubts about whether something has been done properly ที่น่าสงสัย
funds - money available to spend on something เงินทุน
maximum - the most possible ที่สูงสุด ที่มากที่สุด
efficiency - waste little time, energy and resources in doing a task (minimize time, energy and resources in performing a task) (See glossary) การทำงานอย่างมีประสิทธิภาพ คุ้มค่าเวลาและใช้พลังงานหรือต้นทุนในการผลิตน้อย เพื่อให้ได้ผลผลิตมาก, doing a task well without wasting time, money, resources, getting a lot done with limited resources
It's an opportunity cost that the government must direct 65 billion baht per year to paying the FIDF liabilities rather than use these funds for new development projects," he said.
Mr Korn added that as the liabilities stemmed from the central bank's actions in the first place, the responsibility should remain with the central bank, rather than the Finance Ministry and taxpayers.
The FIDF liabilities account for one-quarter of the country's public debt, which stood at 3.96 trillion baht at the end of 2009.
Over the past decade, FIDF liabilities have fallen by only 100 billion baht.
opportunity
- a situation when it is possible to do something that you want to do
(See glossary)
opportunity cost - cost of not making certain choices (foregone alternatives) (See Wikipedia)
direct X to Y - A affects D
development - the gradual growth and formation of something
X stemmed from Y - X was caused by Y
X in the first place - X happened first (before other things being discussed)
taxpayers - people who pay taxes (who don't want to see their hard-earned money wasted) ผู้เสียภาษี
X accounts for one-quarter of Y - X is 25% of Y
decade - a period of ten years ทศวรรษ, ระยะเวลา 10 ปี
opportunity cost - cost of not making certain choices (foregone alternatives) (See Wikipedia)
direct X to Y - A affects D
development - the gradual growth and formation of something
X stemmed from Y - X was caused by Y
X in the first place - X happened first (before other things being discussed)
taxpayers - people who pay taxes (who don't want to see their hard-earned money wasted) ผู้เสียภาษี
X accounts for one-quarter of Y - X is 25% of Y
decade - a period of ten years ทศวรรษ, ระยะเวลา 10 ปี
(Source: Economics, PUBLIC FINANCE, Korn wants solutions for FIDF debt and B65bn interest, 6/03/2010, Wichit Chantanusornsiri, link)
