The big debate in Thailand's current economic policy planning is whether the economy is facing a crisis or not. The government of Prime Minister Srettha Thavisin, who doubles as finance minister, has contended that there is an economic crisis in dire need of both monetary policy loosening and fiscal stimulus, particularly the 500-billion-baht digital wallet scheme. The Bank of Thailand, supported by a clique of economists apparently critical of the government's "populist" policy measures, asserts otherwise that an economic recovery is in progress without the need to lower the benchmark repurchase rate.
These two sides miss the main point about fiscal relief, especially since monetary policy considerations are not under the government's direct purview. The 500-billion-baht stimulus deserves to be implemented because it is an election campaign promise of the Pheu Thai Party, which now leads the coalition government. The digital wallet policy is a battleground not just about being pro or against the Srettha government and Pheu Thai but also about whether Thailand is being run by elected representatives and political parties that the people chose at the poll last May.
If the Pheu Thai-led government is not allowed to put its policy proposals into practice, then there is no hope for the structural reform agenda which the biggest vote winner, the Move Forward Party, has espoused. In other words, political parties must be able to act on their policy platforms because the voters who elected them should be the highest authority collectively in this country. If Pheu Thai cannot move ahead, Move Forward -- or its successor banner in the event it is dissolved after the Constitutional Court's verdict that the party violated the charter by campaigning to amend the royal insult law -- will be similarly opposed.
To be sure, the digital wallet scheme has evolved over the past year. It was first broached as part of Pheu Thai's election campaign drive at a time when the Thai economy was just coming out of the Covid-19 pandemic doldrums. It was reminiscent of Pheu Thai's populist policies in earlier elections that proved to be a great success in connecting with the rural masses and poor urban dwellers. The 500-billion-baht spending plan is also directly associated with Mr Srettha himself, who put his credibility and signature on its merits.
Yet despite its tried and tested populist drive, Pheu Thai stunningly lost the election narrowly to Move Forward by a margin of 151-to-141 parliamentary seats. After Move Forward was outmanoeuvred by conservative forces and denied the parliament speakership and government formation, Pheu Thai benefited from the post-poll shenanigans and formed the government behind a power play that brought back its founder, Thaksin Shinawatra, from exile while installing Mr Srettha as prime minister on the same day.
By then, Pheu Thai's policy platform was in need of regrouping and relaunch. It became a broad growth strategy comprising "soft power", a land bridge in southern Thailand to link shipping and transport between the Andaman Sea and the Gulf of Thailand, and free-trade agreements, crucially underpinned by a 500-billion-baht consumption boost for 50 million to Thais to spend a digital windfall of 10,000 baht each within limited proximity of their domiciles for grassroots pump-priming. According to World Bank calculations, this amount is the equivalent of 2.7% of GDP and could spur additional growth upwards to one per cent over the next two years if it is rolled out by May as planned.
To be sure, a year after it was envisaged, financing the digital wallet scheme has also shifted from streamlining the national budget to borrowing, which must be enacted through parliamentary legislation. It would hike public debt upwards to 65% of GDP after already breaching the 60% prudential threshold during the nine-year stint of former Prime Minister Gen Prayut Chan-o-cha.
The 500-billion-baht consumption boost is being opposed in the same corridors of power that have stood against the populist policies associated with the Thaksin-aligned political parties that have been in government since 2001. In fact, populism and the alleged pandering to the masses became the main justification for the repeated moves by ruling elites in establishment circles to overthrow the Thaksin-aligned governments over the past two decades by way of military takeovers and judicial interventions.
Unsurprisingly, while they gave the Prayut-led and military-backed regime a free pass, these conservative forces are back at work stymying the Srettha-led and Pheu Thai-centred coalition government every step of the way by all means necessary. The Council of State has scrutinised the bill that would put the digital wallet program in action. The National Anti-Corruption Commission has waded in to question its fiscal responsibility. None of these unelected agencies that are largely appointed by the military-backed senate from the coup regime, has paid any heed to parties and policies that the people voted for.
Critical to the conservatives' gripes is Thaksin's return in comfort, not having to spend a day in jail. He is their bete noire who just won't go away. If the government is Thaksin-aligned, then it must be resisted, opposed, and even overthrown in their view, as evident over the past 20 years. What they should be riling about is not that Thaksin will likely end up going home without having to spend a day in jail but that his sentence was reduced from eight years to just one year by royal pardon. To Thaksin, if seven years can be shaved off from his sentence, then what's all the fuss about the remaining one year?
For those who are interested in how democracy can work in Thailand for the Thai people, the government that comes from the ballot box should be respected. Pheu Thai won the reins of government under unusual circumstances, to say the least. Move Forward, as the top vote winner with its structural reform agenda, certainly should be running the Thai government, but it (or its successor) will have to bide its time. For now, Pheu Thai and Mr Srettha deserve to put forward their growth plans to move the Thai economy forward in the face of obstructing conservative elites.
