The Finance Ministry has not ruled out using funds under Section 28 of the State Fiscal and Financial Discipline Act for the digital wallet handout scheme, says Finance Permanent Secretary Lavaron Sangsnit.
He said that in the process of managing funds for the government’s digital wallet project, the Finance Ministry would continue to use established fiscal management methods, with Section 28 serving as one of the government’s fiscal tools.
“We still use fiscal management methods, and Section 28 is still an option. However, at present we have allocated only 450 billion baht, as we estimate that this amount will suffice for the expected number of participants in the project,” said Mr Lavaron.
Section 28, under the State Financial and Fiscal Discipline Act of 2018, stipulates that assigning state agencies to implement activities, measures or projects, in which the government bears the burden of compensating expenses or revenue losses from such operations, is permissible only if it falls within the duties and powers under the law and the objectives of those state agencies.
This is to revive or stimulate the economy, enhance the ability to earn a living, improve the quality of life of the public, or assist and rehabilitate those affected by natural disasters or acts of sabotage.
In making such assignments, the cabinet must consider the potential fiscal burden — both currently and in the future — on the state, along with the impact on the operations of the assigned state agencies, and devise management strategies for the fiscal burden and the impact of these actions.
The total outstanding burden the state must compensate for such operations must not exceed the rate set by the State Fiscal and Financial Policy Committee. State agencies assigned under this section, regardless of whether the assignment was made before or after the Act came into force, must prepare financial cost estimates and management plans for the entire burden on the state for such activities, measures or projects and inform the State Fiscal and Financial Policy Committee and the Finance Ministry.
Initially, the government planned to use funds from three sources to finance the digital wallet project, which was originally set to tally 500 billion baht. These sources included the budgets for 2024 and 2025 and funds from Section 28 by borrowing 172 billion baht from the Bank for Agriculture and Agricultural Cooperatives (BAAC).
Nevertheless, there was criticism from opponents of the project who argued that borrowing from the BAAC under Section 28 might violate the Financial and Fiscal Discipline Act and impact the BAAC’s liquidity.
Eventually, the government decided to reduce the project’s budget to 450 billion baht and not use funds from Section 28.
The funding for this project will come from two sources: the issuance of an additional budget bill for 2024 amounting to 122 billion baht, and the management of the 2024 budget with an additional 43 billion baht, totalling 165 billion baht; and funding from the 2025 budget, which includes an increased budget of 152 billion baht and an additional 132 billion baht from budget management, totalling 284 billion baht.
Mr Lavaron said that if all eligible citizens, or 50.7 million people, registered for the project, the Finance Ministry insists there will be no issue of additional funds. However, the exact number of registrants for this scheme will not be known until the end of September, he said.
Regarding ongoing criticisms that the use of the 2024 budget for the digital wallet scheme would include some expenses that would carry over into the 2025 fiscal year, Mr Lavaron said that according to the budget law, expenses that can be carried over to the following year must be those for which contracts have been committed before the end of the fiscal year such as expenses related to contracts with the private sector.
He explained that the use of the 2024 budget is not in conflict with the budget law because when citizens register for the digital wallet project and are verified as eligible by the state, their acceptance into the project qualifies for carry-over budget usage.
Mr Lavaron insisted the key conditions for eligibility in the digital wallet project include being at least 16 years old on March 31, 2024, having an annual income not exceeding 840,000 baht for the 2023 tax year, and having no more than 500,000 baht in bank deposits as of March 31, 2024.