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UPDATE 1-Thai govt should use fiscal policy more to help economy -c.bank

* BOT to focus on debt restructuring, launches new scheme

* Banks’ bad loans at 3.09% of total lending end-June

* Monetary policy room limited as key rate at record low 0.50% (Adds detail)

BANGKOK, Aug 21 (Reuters) - Thailand’s fiscal policy should play a greater role to help the economy recover from the impact of the coronavirous pandemic, the central bank governor said on Friday, with the benchmark interest rate at a record low.

The Bank of Thailand (BOT) will focus on assisting with debt restructuring, Veerathai Santiprabhob told reporters after the launch of a debt restructuring programme for businesses.

“In such critical condition, the one who is capable of stimulating the economy is the government... and more needs to be done” given the more severe and widespread economic impact of pandemic, he said.

The government has introduced a 1.9 trillion baht ($60.37 billion) coronavirus response package. On Wednesday, it said it would introduce more steps to boost tourism, jobs and consumption.

Southeast Asia’s second-largest economy shrank 12.2% in the second quarter from a year earlier, the worst contraction since the 1998 Asian crisis due to the pandemic impact.

The BOT has forecast a record contraction of 8.1% for 2020.

The BOT has left its key rate unchanged at a record low of 0.50% since May after three cuts this year so that policy room could be used at the most effective time. It will next review policy on Sept. 23.

It has said banks should expedite debt restructuring as well as lending to address liquidity problems.

“Debt restructuring is of great importance to the BOT and it must be accelerated proactively” before business operators becoming non-performing loans (NPLs), Veerathai said.

A so-called “DR BIZ” debt restructuring programme launched on Friday and due to start next month will help some 8,400 targeted businesses with a combined debt of about 1.2 trillion baht, he said.

Last week, the BOT said measure to help debtors should steady NPLs at banks later this year after rising slightly to 3.09% of total lending at the end of June. ($1 = 31.47 baht) (Reporting by Satawasin Staporncharnchai Writing by Orathai Sriring Editing by Ed Davies)

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