Thai government’s 500 billion baht digital wallet under scrutiny

The funding sources for the government’s flagship 500 billion baht handout scheme, better known as the digital wallet, will undergo careful consideration, ensuring that public debt remains manageable, a senior government official stated today.

This scheme is a crucial campaign pledge of the ruling Pheu Thai Party, intending to distribute 10,000 baht to 50 million Thai citizens to stimulate local spending. However, due to concerns over securing adequate funding, the implementation of this initiative has been delayed.

The execution of the giveaway is now expected to take place in the fourth quarter of this year, as the government explores various avenues to secure the necessary funding. This week, the Cabinet greenlit an increase in the deficit for the 2025 fiscal year budget by 152.7 billion baht to support this initiative.

Despite these developments, the plan has drawn criticism from experts who argue that it exhibits fiscal irresponsibility. They contend that economic recovery cannot be achieved solely through handouts but requires addressing the structural issues plaguing the economy.

Responding to concerns about the impact of the deficit and public debt on the country’s credit rating, Deputy Finance Minister Krisada Chinavicharana asserted that it was not a cause for concern.

“The country’s position is strong … public debt will not exceed 70%.”

The administration, led by Prime Minister Srettha Thavisin, has also been encouraging the Bank of Thailand to reduce interest rates to spur growth, stated finance ministry permanent secretary, Lavaron Sangsnit.

“Monetary and fiscal policy must work together.”

Lavaron further emphasised that the central bank ought to provide a clear rationale for maintaining high rates.

Despite government pressure, the central bank has maintained its key interest rate at 2.50% since February, marking the highest rate in over a decade. The decision was made in a split vote, and the next rate review is scheduled for April 10, reported Bangkok Post.