Thailand is preparing a massive cash handout to stimulate the economy, with the Cabinet approving a project to hand out 500 billion baht through digital wallets.
The Cabinet has approved a 500 billion baht project to stimulate Thailand’s economy through digital wallets, clearing another hurdle to fulfilling a vital promise of the ruling Phea Thai party, Reuters reported, citing a statement from Thai Prime Minister Seththi Thavisin.
The 10,000 baht handout to 50 million Thai citizens who will spend the money within six months is designed to spur sluggish growth in Southeast Asia’s second-largest economy, which is struggling with mounting household debt.
Officials said the programme could add between 1.2 and 1.6 percentage points to the kingdom’s economic growth and help the economy grow to at least 5% next year. The cash handout has been called a strategy to ‘resuscitate’ the economy after a decade of low growth under military rule.
Nearly 76 per cent of Thailand’s 60 million people will receive cash through a specialised Digital Wallet app. The programme is aimed at adults earning less than 70,000 baht a month and having less than 500,000 baht in their bank accounts.
Recipients spend the money at their place of residence for six months. Only small shops registered with the programme are allowed to buy goods. Alcohol, cigarettes, fuel and online shopping are also not allowed. Participating shops dispose of the money received under the programme without restrictions.
The plan to hand out the allowances, a significant promise of the ruling Phua Thai Party in the 2023 election, has been postponed until the fourth quarter of 2024 due to a lack of funding. Until earlier this month, the government had been trying to find ways to finance the plan without excessively increasing public debt.
Deputy Finance Minister Julapun Amornviwat confirmed the fourth quarter launch date and said experts had been consulted on the plan’s legality.
‘There will be incentives for job creation, economic activity and investment,’ Julapun added.
The government said funding is envisaged from the 2024 and 2025 budgets, the state Bank of Agriculture, and agricultural co-operatives.
Economists and experts, including two former central bank governors, have warned against the policy, saying handing out allowances risks upsetting fiscal discipline, which the government rejects. Scholars and opponents have also questioned the legality of using public bank funds to finance the handouts.
Thailand’s economy unexpectedly shrank 0.6 per cent in the final quarter of 2023 from the third quarter, prompting the state planning agency to cut its 2024 growth forecast from 2.7-3.7 per cent to the 2.2-3.2 per cent projected earlier.
Thailand’s economy grew 1.9 per cent in 2023, less than expected and down from 2.5 per cent in 2022.
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