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2 นวัตกรรมการพัฒนารายได้
ขององค์กรปกครองส่วนท้องถิ่น

2) The lower rate of interests than a loan from a bank or financial institution Since
this loan has the lower interest rate, bonds should be used to invest in a long

term (15 years or more) for investment in infrastructures and utilities.

3) Enhancing the capacity and ability to manage and pay back the loan as well as
stimulating the development history or credit rating of each district

4) The amount of the loan is more appropriate and consistent with the duration of
the project than the loan from financial institutions.

= Disadvantages of bonds include:

1) The terms of the loan are less flexible than a loan from a financial institution
because the local governments cannot negotiate the agreements on the loan or
the waiver of repayment of the loan.

2) The bond process is complicated. The cost of the operation is relatively high
especially in the case of local bonds that have never been done before such as
fees of the credit rating ranking, fee for bond underwriter.

3) Bonds could cause a problem called Moral Hazard. The local administration
may have an expectation that the central government will pay the debts if the
organization is unable to repay the loan especially if such bonds are guaranteed

by the central government.

4) If the local government does not have the ability to manage debts effectively, it
may cause problems to repay their debts.

However, the loan will be productive and effective when the local fiscal system is
reliable with transparent financial management; for example, not using a loan to pay the fixed
costs, conducting analysis and assessment of the investment value before making the loan,

effective debt management to reduce interest costs, periodically reviewing the status of the
loan, promoting or developing local self-reliance to increase the local financial stability, and

promoting the development of debt markets particularly in the secondary market to promote
flexibility in the bond trading at the local level.

Finding of the Study: Borrowing and bond financing

1. Legal Issues

= Tam-bon Administrative Organization has no authority to make loans since
there is no regulation of the Ministry of Interior compatible with the plan and

the process. The Decentralization to Local Government Act, 2542 B.E, Section