The digital wallet handout, estimated to cost the government 500 billion baht, is two to three months behind schedule, which may result in diminishing economic stimulus effects, says Deputy Finance Minister Julapun Amornvivat.
Originally scheduled to launch in February, the plan to give 10,000 baht in digital money to some 50 million people is now expected to start in May. However, the government still requires parliamentary approval of a lending bill to borrow 500 billion baht to fund the scheme.
Mr Julapun said the Ministry of Finance has not yet drafted the bill, pending an opinion from the Council of State, the government’s legal advisory body.
He declined to say whether the government would cancel the project if the Council of State disagrees with state borrowing as a funding option. Mr Julapun said the council would probably provide an explanation rather than simply saying it agreed or disagreed with the project.
Under Section 53 of the 2018 State Fiscal and Financial Discipline Act, the government can pass a borrowing bill if there is a justification for an urgent handout to solve an economic crisis.
There is a wide disparity between economists and the government, as the latter views the current situation as a crisis, conceded Mr Julapun.
Pheu Thai Party officials have been repeating the message that in their view, a decade of GDP growth averaging less than 2% a year — one of the poorest performances in Southeast Asia — constitutes a crisis.
Mr Julapun said that borrowing 500 billion baht by issuing government bonds would not create an instant burden for the government as the loan would be taken out only after the digital money was exchanged by businesses or cashed out from a state bank. The government could create incentives for people to hold the digital money for as long as possible, said Mr Julapun.
He said the government’s stimulus measures, which include the digital wallet, a trillion-baht southern land bridge, and incentives to attract foreign direct investment, should increase gross domestic product growth. The government has set a target for average annual GDP growth of 5%, about double the current level.
In any case, Mr Julapun said he believed the ratio of public debt to GDP would either remain steady at its current level of 63% or decline.
He also denied the government plans to halt the digital wallet project if borrowing under the Loan Act is blocked by the Council of State.
“We never had any intention to end the project. We want to see the successful implementation of this initiative,” said Mr Julapun.
He said the Thai economy is in crisis and economic growth is inadequate to provide the government with sufficient income to support the country’s ageing demographics over the next 4-5 years, particularly as welfare expenses rise.