Thailand’s government plans to stimulate the economy by giving digital cash handouts of 10,000 baht (£218) to an estimated 50 million Thais
Thailand’s Prime Minister, Srettha Thavisin, has unveiled a £10.8billion digital cash handout plan to stimulate the economy.
The scheme will provide 10,000 baht (£218) to an estimated 50 million Thais for spending at local businesses. Srettha revealed that the 500-billion-baht (£10.8billion) plan, primarily funded from the 2024 and 2025 fiscal budgets, will be launched in the last quarter of the year.
He anticipates that the stimulus and subsequent consumption will boost GDP growth by 1.2 to 1.6 percentage points. In December, the World Bank projected Thailand’s year-on-year GDP growth at 1.5%. Additional funding will come from the state’s Bank for Agriculture and Agricultural Cooperatives, designated for payouts to approximately 17 million farmers.
The digital purchases will only be permitted in the recipients’ own districts, excluding items such as oil, services, and online purchases. Srettha labelled the project a “life-changing policy for the people.”
He expressed regret that the project could not be implemented sooner but stated that the government needed to ensure it was transparent and legal. The Pheu Thai party’s major campaign promise from last year’s general election, a plan to boost the economy through cash handouts, has faced criticism from economists.
They argue it’s not an effective method for sustainable economic growth compared to other strategies. Originally, the Pheu Thai party proposed digital wallet payments for all Thais aged 16 and over, but the current scheme is only for lower-income individuals, specifically those earning under 840,000 baht (£18,200) annually with less than 500,000 baht (£10,800) in savings.
The government also came under fire for its initial idea to fund the scheme through borrowing, which would add to the public debt burden. Despite government pressure, Thailand’s central bank held firm and kept interest rates steady at a recent meeting on Wednesday.
However, analysts, including Gareth Leather of Capital Economics, anticipate a rate cut from the Bank of Thailand’s current 2.5% benchmark later this year as inflation continues to drop for the sixth consecutive month. Leather commented, “While the economy is not exactly in a crisis, it is in need of more support,” highlighting the central bank’s desire for independence but predicting a likely rate cut at the June meeting.
With household debt levels being relatively high in Thailand, higher interest rates could hinder spending and investment by increasing borrowing costs.
