The government expects the rollout of a long-delayed cash handout to most adult citizens to help reverse a slump in economic activity and tackle the highest household debt in Southeast Asia.
The distribution of 10,000 baht each to all Thais 16 years and older under a certain income threshold in the fourth quarter will fire up purchasing power, revive manufacturing and boost overall confidence in the economy, Finance Minister Pichai Chunhavajira said at a press conference on Wednesday.
Beneficiaries can sign up for the so-called digital wallet from Aug 1 to Sept 15 through the Tang Rath application, which is already widely used to access dozens of government services. Those without smartphones can register from Sept 16 to Oct 15 by using their ID cards.
No messages will be sent and no calls will be made to persuade people to register for the scheme, officials stressed, in light of reports that scam artists are already active.
Consumers can spend the cash at more than 2 million retail outlets, convenience and mom-and-pop stores under the scheme, aimed at helping both individuals and small businesses, though strict curbs include a ban on using the money to buy alcohol or cannabis, among other things.
The handouts, the centrepiece of Prime Minister Srettha Thavisin’s efforts to revive growth and the fortunes of the ruling coalition, were originally intended for early 2024, but were delayed by wrangling over how the government would pay for the stimulus.
But lawmakers last week backed plans for an additional 122 billion baht of spending in the current fiscal year to fund the digital wallet.
“This is not just a normal cash handout,” Mr Pichai said. “It’s a stimulus that encompasses all levels of economic activity, which will lead to more income generation and generate additional tax revenue for the government to do other things.”
Key details of the programme:
- Cash cannot be used for purchase of alcohol, tobacco, cannabis, lottery, gold, diamond, natural gas, fuel, electronic devices and some other goods
- More than 2 million shops can join the program; registration opens Oct 1
- Citizens have to buy products in shops located within districts where they reside
- Money cannot be used for online purchases of goods
- Registered merchants and vendors allowed to transact among themselves without any restrictions
- Annual income limit set at 840,000 baht as of last year for participants
- People with more than 500,000 baht in savings in banks as of March 31 cannot participate in the digital wallet
The government originally expected to spend about 500 billion baht on the stimulus as there are 50.7 million people eligible. But officials have since said they only expect a take-up rate of at most 90%, lowering the cost to about 450 billion baht.
The funding will come from the state budget over two fiscal years. Of the total, 165 billion baht will come from the fiscal 2024 budget, which will end on Sept 30, and the remaining 285 billion baht will come from the next fiscal year. Issuing a supplementary budget is also among the government’s options to raise funds, according to Deputy Finance Minister Julapun Amornvivat.
If effective, authorities predict the stimulus will lift the growth rate in Southeast Asia’s second-largest economy, which has averaged less than 2% annually for the past decade. Thailand’s recovery from the coronavirus pandemic had been hurt by a slump in manufacturing and exports with tourism being the sole bright spot in the economy.
While headline inflation has stayed below the central bank’s target range in the past year, prompting repeated calls for a rate cut from the government, the Bank of Thailand has cited household debt levels above 90% of gross domestic product as among the reasons to hold the cost of borrowing at the highest level in a decade.
Household debt has soared to 16.37 trillion baht, or 90.8% of the nation’s GDP as of the end of March, from less than 14 trillion baht before the pandemic, central bank data show.
Srettha a no-show
Prime Minister Srettha Thavisin, who was expected to lead the press conference, did not take part. He posted on X that the Ministry of Finance would outline the details.
“We’re ready. Today marks our first step. We’ll be moving forward together with another 50 million people,” he wrote.
Deputy Prime Minister Phumtham Wechayachai played down Mr Srettha’s absence, saying the prime minister had other engagements and the government worked as a team.
Sirikanya Tansakul, deputy leader of the opposition Move Forward Party, said there was little new information provided at Wednesday’s much-touted press conference.
She said that except for the registration period which was confirmed, questions about whether the funds earmarked for the 2024 fiscal year could be spent in the 2025 fiscal year remained unanswered.
The 2024 fiscal year ends on Sept 30 but the money will be distributed in the last quarter of this year which falls in the 2025 fiscal year.
“There’s no substantial update. No expectation, no disappointment,” she said.