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Cabinet approves loans for Eastern Aviation City Project development

Cabinet approves loans for Eastern Aviation City Project development

Provided by Nation.

The Cabinet on Tuesday approved the borrowing of loans to support the construction of two initiatives under the U-Tapao Airport and Eastern Aviation City Development Project.

According to a government source, the Finance Ministry has been assigned to secure a loan from the Asian Development Bank (ADB) for the development of Motorway 7, which links to U-Tapao Airport. 

The project, valued at US$68.74 million (approximately 2.44 billion baht), aims to enhance the motorway infrastructure within the Eastern Economic Corridor (EEC) to better withstand the impacts of climate change.

The Finance Minister, or a representative designated by the minister, will be authorised to sign the loan agreement on behalf of the Government of Thailand, a source said.In addition, the Cabinet has approved the Finance Ministry to borrow a loan of US$423.05 million (13.21 billion baht) from the Asian Infrastructure Investment Bank (AIIB) for the U-Tapao Airport and Eastern Aviation City Development Project, specifically for the construction of a second runway and taxiway.

The Cabinet also approved the draft loan agreement and related documents, and consented to the use of arbitration for dispute resolution, in accordance with the terms set out in the general conditions for government loans.The National Economic and Social Development Council (NESDC) has recommended that the Public Debt Management Office consult with the Budget Bureau, the Royal Thai Navy, and the EEC Policy Committee to align the loan disbursement and financing plans with the revised timeline for the opening of U-Tapao Airport, which has been significantly delayed. This coordination aims to ensure efficient public budget management.

However, the Bank of Thailand has expressed concerns regarding the exchange rate risk associated with borrowing in US dollars. It noted potential issues related to sufficiency for expenditures in baht, as well as repayment of the loan in the future. 

The Finance Ministry has therefore been urged to consider appropriate risk management strategies to mitigate exchange rate exposure.

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AFP-JIJI PRESS NEWS JOURNAL


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