The new government is expected to issue utility tokens to support its digital wallet scheme, with the plan requiring the approval of the Bank of Thailand as tokens are currently prohibited for use as payment by the regulator.
Asia Plus Securities (ASPS) expects the Pheu Thai-led government to issue Type 1 utility tokens as digital handouts worth 10,000 baht each to Thais aged 16 and older. The scheme is estimated to require a budget of 560 billion baht.
The government is consulting with the Finance Ministry and the Securities and Exchange Commission about how to issue this type of token and determining the funding sources, said the brokerage.
"The government is expected to issue the tokens for consumer purposes, and utility tokens cannot be traded on digital asset exchanges," ASPS said in a research note.
Prime Minister Srettha Thavisin recently confirmed the digital wallets are expected to be launched at the beginning of next year.
The utility tokens are subject to specific conditions, such as the purchase of consumer goods within a four-kilometre radius of the recipients' residence.
Citing a Thailand Development Research Institute study, ASPS said part of the budget required for the digital wallet plan would come from government income in fiscal 2024, which is estimated to increase by 260 billion baht, and tax revenue, which is expected to rise by 100 billion baht, thanks to economic stimulus measures.
Therdsak Thaveeteeratham, executive vice-president of ASPS, said there are some concerns about the source of funds. For example, the government budget might be reduced in some areas, including investments, given high public debt.
The increase in tax revenue from stimulus measures is also not guaranteed because there are uncertainties over whether the moves will be adequate to kick-start the economy, said Mr Therdsak.
ASPS said the government could borrow the money to finance the digital wallet scheme. Based on June 2023 data, Thailand's public debt-to-GDP ratio is 61.2%, and the government can legally borrow until the ratio reaches 70%.
That means the government can borrow an additional 1.58 trillion baht based on GDP estimates of 17.9 trillion baht.
Yet the brokerage said in principle, government loans should not hit that ceiling.
"This issue needs to be monitored over the long term to determine whether it will produce effective results and when the scheme is going to occur. But in the short term, the economy is expected to recover because of existing supporting factors," said ASPS.