The wait is over. The Srettha government finally launched the long-awaited digital wallet scheme on Thursday. This costly cash handout is the flagship policy of the Pheu Thai Party from the 2023 general election. The scheme will put 450 billion baht of digital cash into the hands of over 40 million eligible recipients, with the hope that they will buy local goods, spurring grassroots trade and investment.
Thursday's launch is just the first phase and generated much-needed positive sentiment among the public. Needless to say, the Pheu Thai Party, which has seen its popularity decline, can at least breathe a sigh of relief. Within a single day, 14.5 million eligible people registered through the newly developed Tang Rat online application. It is expected that a total of over 40 million people will complete online and offline registration by the end of next month.
Even so, the prospects for this economic stimulus are still uncertain. As public debt hits the ceiling, the government cannot take out a huge loan to fund its electoral vows. It needs to scrape together funds from this and next year's fiscal budgets to fulfil the almost half-trillion-baht cash handout promise. This raises the question of which projects and ministries will have to forfeit their budgets for the wallet scheme.
Thursday's launch showed how determined the Pheu Thai government is to realise the wallet project. It ignored cautions and warnings from economic experts that the economic gains will not be as high as projected. Indeed, the Bank of Thailand has argued that the 450 billion baht will contribute only 0.9 percentage points to Thailand's GDP growth -- not 1.2-1.8 percentage points as Pheu Thai predicted. With the local supply chain relying on imported goods or products from major retailers, economic experts predict that a massive amount of money will go to big businesses instead of the grassroots economy.
The big question is who and what will benefit from the digital wallet scheme. Will the money end up in the pockets of big companies as economists have warned? Should the 450 billion baht -- which indeed could have been spent on other development schemes -- be expected to lift GDP as Pheu Thai boasted it would? If not, is there any mechanism to hold politicians accountable for using state budgets to fulfil their electoral promises?
So far, the government does not seem to have guardrails or a monitoring project to show how the money generates benefits for local suppliers. It only has regulations that prohibit it from being spent on buying certain goods such as electronic gadgets. To help the local economy, the government requires that in 174 areas, recipients must buy from local and grassroots sellers -- not big commercial retailers or department stores. As Pheu Thai tightly controls the Finance Ministry, it would not be surprising if all the information from the government was one-sided.
The implementation of the wallet scheme is not just about putting money in people's hands and hoping it will boost the economy. Policymakers, especially lawmakers on opposition benches and parliament's Upper House must keep an eye on the programme, tracing where the money goes and whether the local economy reaps real benefits as politicians want us to believe.
Without transparency and sound monitoring, this economic stimulus will set a precedent for future governments to use taxpayers' money to curry political favour.
