Thailand’s Prime Minister Srettha Thavisin recently revealed a comprehensive plan aimed at kickstarting the nation’s economy.
Under this initiative, approximately 50 million Thai citizens will receive digital cash handouts of 10,000 baht ($275) each, to be spent at local businesses within their districts.
The ambitious 500-billion-baht ($13.7-billion) plan, primarily funded through allocations from the 2024 and 2025 fiscal budgets, is scheduled to be implemented in the final quarter of the year.
Srettha anticipates that this stimulus, coupled with increased consumer spending, will contribute significantly to GDP growth, projecting an increase of 1.2 to 1.6 percentage points.
This move comes amidst modest GDP growth estimated at 1.5% by the World Bank in December.
Part of the funding will also be sourced from the Bank for Agriculture and Agricultural Cooperatives, specifically designated for supporting approximately 17 million farmers.
Notably, the digital cash can only be used within recipients’ respective districts and excludes certain items such as oil, services, and online purchases.
Describing the initiative as a “life-changing policy,” Srettha expressed regret over the delay in its implementation, citing the government’s commitment to ensuring transparency and legality.
Despite being a prominent campaign pledge by Srettha’s Pheu Thai party in the previous general election, the plan has faced criticism from economists who argue its efficacy compared to alternative measures for sustainable economic growth.
Originally proposed as a universal digital wallet scheme for all Thai citizens aged 16 and above, the current plan is limited to lower-income individuals with specific income and savings criteria.
Initial proposals to finance the plan through borrowing drew concerns over escalating public debt levels.
Meanwhile, the central bank, resisting pressure to stimulate the economy through interest rate cuts, opted to maintain its policy unchanged during a recent meeting. However, analysts anticipate a potential rate cut later in the year due to consecutive months of declining inflation.
Gareth Leather of Capital Economics emphasized the need for additional support for the economy, particularly given Thailand’s high levels of household debt.
Higher interest rates could further deter spending and investment, highlighting the delicate balance between economic stimulus and fiscal prudence.
