Thailand’s Prime Minister Paetongtarn Shinawatra has announced that part of the government’s much-awaited 450 billion baht (USD 13.1 billion) “digital wallet” handout will be distributed in cash, marking another change to the flagship populist policy.
Details are still being finalised and will be announced in a policy statement to Parliament, she added.
The digital wallet handout had previously promised to transfer 10,000 baht (USD 292) in credit to 50 million Thais via a smartphone application to spend in their localities within six months.
The comments from Paetongtarn Shinawatra come two weeks after she was selected to become Thailand’s youngest Prime Minister by the Southeast Asian country’s Parliament after her predecessor Srettha Thavisin, the policy’s biggest advocate, was removed from office by a court.
Srettha made the consumption stimulus a key part of his campaign in 2023’s general elections, and continued to push it as Prime Minister, calling it a “life-changing policy for the people.”
In July, Srettha said Thais could start registering on August 1 for the digital cash handout. Recipients had to earn less than 70,000 baht a month (USD 2,030) and hold less than 500,000 baht (USD 14,500) in a savings account to qualify.
While a new government is expected to be formed by mid-September, the digital handout scheme, the ruling Pheu Thai Party’s main election platform, aims to jumpstart an economy that has been lagging behind regional peers.
Southeast Asia’s second-largest economy grew 2.3% in the April-June 2024 quarter, but analysts said fiscal policy uncertainty clouded the outlook. Thailand’s central bank has forecast economic growth of 2.6% for this year, after 2023’s 1.9% expansion.
Economists and two former central bank governors have criticised the handout programme for being fiscally irresponsible and the government has delayed the scheme due to funding issues. In April, Thailand’s budget director warned that the gap for the current fiscal year would widen by USD 23.6 billion, making up 4.4% of GDP. It is due to be rolled out in the final quarter of 2024. Government officials, however, have promised the plan will adhere to fiscal discipline.
The threat of legal challenges forced Srettha to rework the funding model for the stimulus package. Instead of resorting to a one-time borrowing, he proposed using money from the state budget for its next fiscal year, starting October 1, as well as a supplementary budget from the current fiscal year.
Paetongtran is the daughter of the influential former Prime Minister Thaksin Shinawatra, who is still noted as a major force in Thai politics. In a speech to top executives in August 2024, Thaksin backed the digital wallet scheme and previously said allocating part of the handout in cash would be beneficial to vulnerable groups.
As per Syetarn Hansakul, a senior economist at the Economist Intelligence Unit, the stimulus will still be coming, though perhaps in a less digital form.
“[The government] received feedback from their grassroots supporters in the northeast who find [getting the stimulus] difficult to do through the official app,” she told Fortune.
While noting that middle-income and lower-middle-income Thais may benefit from the direct stimulus, Hansakul stated that any boost in economic activity due to the digital handout scheme would be a short-lived one, lasting only two quarters at most.
“The government’s hope that the stimulus will increase GDP by 1.6% is highly optimistic,” remarked Alexandra Hermann, lead economist for macro forecasting and analysis at Oxford Economics.
“The digital money can only be spent in registered stores in one’s voting district, with further restrictions on what items the money can be spent on,” she noted.