Economic tonic seen as urgent
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Economic tonic seen as urgent

Exclusive: Digital money scheme may help avert a deeper economic crisis

Prommin Lertsuridej, secretary-general to the PM, said the 10,000-baht digital money scheme is an economic necessity. (Photo: Pattarapong Chatpattarasil)
Prommin Lertsuridej, secretary-general to the PM, said the 10,000-baht digital money scheme is an economic necessity. (Photo: Pattarapong Chatpattarasil)

The government's 10,000-baht digital money handout is designed to address the economic crisis facing the country, Prommin Lertsuridej, secretary-general to Prime Minister Srettha Thavisin, said yesterday.

Dr Prommin came out in defence of the policy and gave assurances the 500-billion-baht loan being sought to finance it would be repaid during the government's four-year tenure.

In an exclusive interview with Bangkok Post, Dr Prommin said the economy is in dire straits but the scheme has the potential to turn it around.

"Let's get things straight. The digital wallet scheme is intended to stimulate the economy. It's not just a money giveaway.

"Information from the Bank of Thailand and other agencies shows Thailand's economy is in crisis and the pace of economic recovery is very slow,'' he said.

The country experienced a slump during the Covid-19 pandemic. The economy has since been unable to grow robustly and GDP remains at a lower rate than other countries in Southeast Asia, Dr Prommin said.

"Household debt now stands at 90% of GDP while Thailand ranks seventh globally in terms of the wealth gap between rich and poor,'' he said.

"Inflation started at 5% this year while the production rate in the first quarter of 2022 stood at 62% but has since dropped to 58% this year. Figures also show that household consumption has fallen.

"Spending in the state sector has also been affected by the delayed formation of the new government,'' Dr Prommin added. "These are the justification for the economic stimulus,'' he said, referring to the digital wallet plan.

The situation has been exacerbated by the impact of the Russia-Ukraine war, the Israel-Gaza conflict and frayed US-China ties amid rising global oil prices, he said.

Some politicians have suggested an executive decree to borrow money to finance the scheme be invoked to address the crisis, Dr Prommin said.

He said the government has come up with a bill seeking to borrow 500 billion baht to fund the scheme that will be scrutinised by parliament.

"An executive decree must also be endorsed by parliament anyway. This is no different from a legislative bill. The government will try to push for the passage of the bill within three months,'' he said.

Dr Prommin said the handout will benefit low-income earners as their spending will help spur economic activity and micro-investment.

A survey by Sripatum University found many recipients of the digital money aim to pool the cash together with other family members so they can make bigger investments, Dr Prommin said.

He added that during a meeting with Prime Minister Srettha Thavisin, Bank of Thailand (BoT) governor Sethaput Suthiwartnarueput cautioned against introducing a new currency for the digital wallet scheme.

BoT says OK to loan

However, the governor has no objection if the government proceeds to take out the loan to finance the scheme and earmarks the fiscal budgets for repayment, Dr Prommin said.

Mr Sethaput also stressed the government must have sufficient cash at hand for the launch of the scheme at the outset, Dr Prommin said.

Dr Prommin insisted the handout will not breach financial discipline, saying the public debt to GDP ratio is capped at 70% yet the current ratio stands at just 61%.

There is room for a 500-billion-baht loan here, he said.

"The BoT governor said that provi- ding an allocation from the annual budget is earmarked for the repayment, the loan will not undermine financial discipline,'' Dr Prommin said.

He said the government would repay the loan during its four-year tenure, or by 2027, and it would draw up a repayment plan and include it in the annual budget spending plan.

The government will consult the Council of State about the legality of the bill seeking to borrow the loan to finance the handout, he said.

The digital currency will be offered to Thais aged 16 years and older who earn less than 70,000 baht per month and have under 500,000 baht in bank deposits.

Based on these criteria, an estimated 50 million people will be eligible.

The money can only be used for food and consumer goods. It cannot be used to buy online goods, cigarettes or liquor, cash vouchers or valuables like diamonds, gems or gold.

It also cannot be used to pay off debts or cover water or electricity bills, fuel, natural gas or tuition fees.

The money must be spent in the district where the recipient's home is registered.

Converting the digital currency into cash is also prohibited.

Purchases can be made at all stores, including those operating both within and outside the tax system.

Registered vendors can cash in the digital money at state banks before the end of April 2027 if they are in the tax system.

Vendors outside the tax system can use the digital money to purchase goods, but cannot cash it in at state banks.

The digital wallet scheme is intended to increase spending during the six-month period after its launch in May, three months later than originally planned.

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