Thai govt plans huge digital wallet handout to boost economy
The Pheu Thai Party government, led by Prime Minister Srettha Thavisin, is set to roll out a massive digital wallet handout scheme worth 500 billion baht (US$13.75 billion) in the fourth quarter of this year. The scheme, which is designed to stimulate economic activity, involves transferring a sum of 10,000 baht (US$275) to 50 million Thai citizens, intended to be spent locally within a six-month timeframe.
As the finance minister as well, the 62 year old prime minister stated at a recent briefing that the ambitious scheme could potentially increase the country’s gross domestic product (GDP) growth by 1.2 to 1.6 percentage points. He emphasised the crucial need for substantial stimulus measures, given that growth in the first quarter of 2024 was likely less than 1%, following a mere 1.7% expansion in the preceding quarter.
The scheme targets Thais aged 16 and over, who earn less than 70,000 baht (US$2,000) a month and have less than 500,000 baht (US$14,000) in their bank accounts. The selected recipients will then receive a 10,000-baht (US$275) handout. Based on these eligibility criteria, an estimated 50 million individuals qualify for the scheme, a slight decrease from the initial 56 million.
However, financing the scheme without significantly contributing to public debt has proven to be a challenge for the government. This has drawn criticism from certain economists and ex-central bank governors, who have deemed the scheme as fiscally reckless.
In response to these concerns, the Cabinet last week approved a proposal to increase next year’s budget deficit by 152.7 billion baht (US$ 4.2 billion), earmarked to stimulate the economy, reported Bangkok Post.
Despite these efforts, concerns persist about the government’s planned 10,000-baht digital handout scheme. Economists warn it may impact the value of the baht and erode monetary and fiscal discipline. The Bank of Thailand (BoT) has also issued cautionary advice regarding the project.
BoT Governor Sethaput Suthiwartnarueput posits that the economy’s post-pandemic recovery is gaining traction, and there is no crisis severe enough to warrant such a large fiscal stimulus.
