The Pheu Thai Party is facing a Catch-22 situation over its controversial digital wallet scheme, which has drawn heavy criticism.
Scheme opponents have asked independent agencies like the National Anti-Corruption Commission (NACC) to put the brakes on the 560 billion baht policy for fear it will be a financial disaster, yet Pheu Thai cannot scrap it. In doing so, the party could be accused of making a promise it could not deliver on or cheating voters during the election campaign.
But by implementing it, the party may end up in court if the scheme goes wrong.
Some opponents have lodged complaints with the Ombudsman, asking for a petition to be submitted to the Administrative or Constitutional courts as the scheme may breach financial discipline or if pursuing such a dubious scheme may be interpreted as a dereliction of government duty. The Ombudsman has accepted the complaints.
Last week, former Bank of Thailand governors Veerathai Santiprabhob and Tarisa Watanagase made an unprecedented move when they, together with three former deputies as well as a number of academics, signed an open letter against the handout scheme. They said there is no need for such a stimulus measure as the economy is recovering.
They are of the view the government should use the huge amount of money to improve infrastructure, such as water management, which can secure sustainable growth, or deal with burgeoning household debts.
Moreover, they slammed the government for being overly optimistic, promoting the scheme without realistic foresight, and pursuing a policy that would be a financial burden.
The NACC has agreed to set up a panel to consider adverse impacts of the scheme.
The Auditor-General's Office has also studied the risks of the scheme as it may undermine the country's financial stability. At the same time, parliament has started an investigation.
The Upper House, led by Senator Seree Suwanpanont, chairman of the political development committee, is to apply Section 245 of the charter that allows the auditor-general to take action. The House committee has summoned related officials for a meeting on Tuesday.
Methee Krongkaew, a former anti-corruption commissioner, lambasted the handout scheme, likening it to the contentious rice-pledging scheme of the Yingluck Shinawatra administration.
At that time, the Yingluck government shrugged off all concerns over the scheme, which ended up a financial disaster.
The NACC warning that Yingluck's government stubbornly ignored public concerns when it started the expensive scheme in 2011 was cited in court hearings.
Several agencies had pointed out disadvantages, particularly the possibility of graft and misconduct.
Unfortunately for Thailand, those warnings came true. Graft was detected at several levels, with reports of non-eligible farmers joining the scheme and some farmers taking rice from neighbouring countries to add to the ill-gotten benefits.
Worst of all was the "government to government" deal that did not exist as rice was actually circulated in the local market, not sold abroad as claimed, and that caused severe losses.
When the graft was revealed, a number of people involved -- the commerce minister and his deputy, plus senior officials -- were jailed. Yingluck, who was given five years' imprisonment for not stopping the graft, managed to flee the country.
This could be the case for the digital wallet if the government ignores the warnings. While the chance of graft is low, Pheu Thai will still have to take responsibility for setbacks from the policy.
After the studies, the NACC is to issue warnings to the Srettha government about the impact, such as a tax burden and possible corruption. If the government is reckless, allowing graft or misconduct, it will have to pay the price for such an extreme populist policy.
Over the past 20 years, we have seen the impact of populism that began with the Thaksin Shinawatra government, namely heavy farming subsidies, to the Yingluck government's rice scheme, which significantly damaged farmer incentives. Now, more people are questioning the digital money scheme's disadvantages.
There are ambiguities in how the scheme is to be implemented, particularly the source of the money since the state budget is limited. If the government takes out loans, it would put a huge strain on state coffers. Borrowing from the Government Savings Bank would be a breach of the bank's principles, given its advocacy of family and kids savings.
Due to these uncertainties, the Srettha government has delayed the launch, initially scheduled for Feb 1.
There are a few more questions about the plan to develop a new application, which also requires a huge sum of money, instead of using the existing Paotang App introduced by the previous Prayut Chan-o-cha government that already has data on the transactions of over 40 million people.
Of course, Paotang App data is not perfect, with complaints of mistakes. But all the Srettha government has to do is fix the bugs and make it better instead of spending taxpayers' money on creating a new app.
Instead of spending resources on developing its own app, the government should spend time fine-tuning the scheme to make sure the handout serves the original purpose of increasing economic activity and actually stimulating the local economy and production.
By dismissing these concerns as groundless rumours, the government cannot clear the air. It may fear losing face if it uses the Paotang app, but spending extra money for a new one seems illogical.
Another question about the criteria of eligible recipients, changing from everyone over 16 to those on low incomes, may create resentment the party would want to avoid.
At this stage, the digital wallet has become a trap for Pheu Thai. Pushing it or stepping back will bring trouble. But after all, it's likely the party will still take the risk, pursuing it for political reasons since this is its flagship policy and the party always takes pride in its economic policies.
The party still hopes that the project, impossible as it may seem, will help restore a reputation that was shattered during its last time in government. So it will have to go ahead at all costs.
