Thailand’s former central bank chiefs joined economic experts in urging the government to scrap its flagship $15 billion cash handout policy, warning that it risks stoking inflation and hurting long-term fiscal discipline.
The “digital wallet” program, which would give most Thais a one-time handout of 10,000 baht ($270), will do more harm than good, according to a statement signed by 81 economic experts.
Among the high-profile signatories were Veerathai Santiprabhob and Tarisa Watanagase, two former Bank of Thailand governors who have joined a growing backlash against Prime Minister Srettha Thavisin’s most ambitious economic plan yet, barely two months after he rose to power to end a political impasse that followed a May general election.
The statement also echoed concerns raised by current central bank chief Sethaput Suthiwartnarueput, who called such spending “inappropriate.” Just last week, the Bank of Thailand increased interest rates to the highest level since 2013 as a preemptive action to ward off inflationary pressure — partly from Srettha’s planned stimulus.
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The digital wallet program — set to be rolled out in the first quarter of 2024 — is the main pre-election promise of Srettha’s Pheu Thai Party. Thais from the age of 16 are eligible to receive the handouts, and the money is to be spent on specific goods and services around their neighborhoods and within a set period.
Government officials say the multiplier effect on the economy could be four times the cost of handouts and lift economic growth to as high as 5% in 2024, from 2.8% projected for this year.
Srettha, a former property mogul who also holds the finance minister portfolio, faces the challenge of boosting growth amid declining demand for Thai goods from its top trading partner China, and lackluster spending by foreign tourists.
Expectations that the handout would act as a fiscal multiplier to stimulate growth is “deluded” as the money is better spent as direct public expenditure and investment, critics of the plan said in the statement dated Oct. 5.
“Nobody can conjure money. There’s no money growing on trees or falling from the sky,” they wrote. “Ultimately the people will have to pay back the price, whether in the form of higher taxes and/or higher costs of living due to inflation.”
Alternatively, the government should at least narrow down the beneficiaries of the program and limit the handout just to those in need, according to Anusorn Tamajai, director of a research center at the University of the Thai Chamber of Commerce.
Asked to comment on the academics’ statement, Srettha on Friday told reporters he was open to hearing differing opinions but it was “impossible” to limit recipients to specific groups.
“We will listen to everybody, including the people who are eagerly asking me when it will be rolled out,” Srettha said. “We might still adjust it or make it more suitable.”