The government said on Monday that it is open to adjusting the 560 billion baht handout scheme with input from the central bank, as experts warned about the programme's viability and its risk to the economy.
The signature digital wallet policy of the populist Pheu Thai Party involves disbursement of 10,000 baht to 56 million Thais, as a means of stimulating Southeast Asia's second-largest economy.
The policy, which the government has refused to scrap, would mainly be financed by the fiscal budget, said Deputy Finance Minister Julapun Amornvivat, adding that it would "create jobs, production and consumption".
Mr Julapun, however, also said the government was open to considering other views, and could reduce the scope of the programme. "We are working together and can make adjustments based on the central bank's proposals," he added.
Academics and economic experts, including former Bank of Thailand (BoT) governors Veerathai Santiprabhob and Tarisa Watanagase, have urged the government to scrap the plan, saying it would stoke inflation and damage the country's fiscal stability and credit rating.
"Stimulating the economy must not destroy long-term fiscal stability," they said in a statement, which was signed by 81 people.
The government, which came to power in August, is targeting 5% annual growth. The economy grew 1.8% in the April-June period on the year and 0.2% on the quarter, sharply slowing from the previous three months, as exports slumped.
The BoT last month cut its 2023 economic growth forecast to 2.8% from 3.6% projected earlier, but raised its 2024 growth outlook to 4.4% from 3.8%. Last year's growth was 2.6%
The central bank last month unexpectedly hiked its key interest rate to a 10-year high of 2.5%, a move likely to frustrate efforts to revive the economy through consumption.
Lavaron Sangsnit, finance permanent secretary, said Thailand's growth was beneath potential and stimulus was not the wrong move.
"Fiscal policy and monetary policy must go in the same direction," he said.
"It's like driving a car. Fiscal policy will be the accelerator. Monetary policy will be the brake. We must find a rhythm to drive this car together."
