Thailand's cabinet has approved a plan to suspend debt repayments for millions of farmers for three years at a total cost of about 33 billion baht ($908 million) to the government, a deputy finance minister said on Tuesday.

The suspension of both the principal and interest payments will begin on Oct. 1, Julapun Amornvivat told reporters, adding that farmers who have kept up with interest payments would also be allowed to borrow up to 100,000 baht from the state-owned Bank for Agriculture and Agricultural Cooperatives.

The aim of the measure is to help ease the burdens of farmers so that they "come back strong", he said. About 2.7 million farmers are eligible to join the programme.

Thailand, the world's second largest rice exporter, has one of Asia's highest levels of household debt.

In 2021, 66.7% of all agricultural households were in debt, largely from farming-related activities, according to government data. Many farming families are financially burdened after borrowing to fund their crops, with debt spanning generations.

The debt plan is part of a series of measures prepared by the new populist government, which took office last month, to revive a sluggish economy weighed down declining exports and falling investor confidence.

The suspension will cost the government about 11 billion baht ($302.8 million) per year, Julapun said, adding that the cabinet approved about 12 billion baht on Tuesday. ($1 = 36.34 baht) (Reporting by Kitiphong Thaichareon; Writing by Orathai Sriring; Editing by Kanupriya Kapoor and Miral Fahmy)