BANGKOK – Thailand will dole out 560 billion baht (S$21 billion) to its 55 million adults in the next six months to spur domestic demand and investment, with new Prime Minister Srettha Thavisin pitching the revival of a sluggish economy as his government’s top priority.
All Thais aged 16 and above will receive 10,000 baht each that can be spent on specific goods and services in their neighbourhood within a set period.
The government will also soon cut energy prices and offer a debt moratorium to farmers and small businesses battling loan burden, Mr Srettha said in a customary policy statement made in Parliament on Monday.
The so-called digital wallet plan “will act as a trigger that will once again wake up the country’s economy”, Mr Srettha said, adding the handout will ensure even distribution of the money into all sectors of the economy.
The first working meeting of Mr Srettha’s Cabinet on Wednesday is likely to sign off on some of the measures outlined by the premier in Parliament.
The digital wallet programme – set to be rolled out within the first quarter – is the main pre-election promise of Mr Srettha’s Pheu Thai Party and officials say the multiplier effect on the economy could be four times the handout and lift economic growth next year to as high as 5 per cent from 2.8 per cent projected for 2023.
Mr Srettha, a former property mogul who also doubles as the finance minister, faces the challenge of boosting growth amid declining demand for its goods from its top trading partner China, and less-than-expected earnings from foreign tourists. The 11-party coalition government also faces the prospect of a spurt in inflation as drought conditions threatens to slash harvests of crops such as rice and sugar.
The Thai financial markets, which have seen an exodus of foreign investors in the wake of the post-election turmoil, were largely neutral to the policy announcement. The benchmark stock index was down 0.5 per cent by 11.26am in Bangkok after opening higher, while the baht held its 0.4 per cent gain against the US dollar.
While Mr Srettha’s policy statement marks the end of a government formation process and months-long political impasse that followed the May general election, the new leader now needs to quickly pass a budget for the fiscal year starting on Oct 1. He also needs to tackle household debt at 90 per cent of gross domestic product (GDP) and public debt at 61 per cent of GDP.
The government intends to fund the digital wallet programme via state budget and additional taxes from the programme without resorting to fresh borrowing. But economists from Bank of America Securities and Nomura Holdings say the spending plans will widen the fiscal deficit, limiting the country’s room to absorb future shocks.
The opposition Move Forward Party slammed the government for not spelling out details and setting deadlines for implementation of the newly announced initiatives. “If this policy statement is like a Global Positioning System, the nation will probably get lost,” said Ms Sirikanya Tansakun, a deputy leader of Move Forward.
The short-term priorities for Mr Srettha’s administration will include boosting tourism revenue by easing visa processes and fee waivers for travellers from select countries. It also plans to hold a referendum on overhauling the nation’s Constitution, he said. BLOOMBERG
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