Thailand Looks to Avoid Borrowing, Challenges for Digital Wallet

People carry shopping bags in Bangkok, Thailand. Photographer: Chalinee Thirasupa/Bloomberg (Chalinee Thirasupa/Bloomberg)

(Bloomberg) -- The Thai government says it may be able to avoid borrowing to fund its “digital wallet” cash handout to citizens, which has been delayed by controversy over its funding plans.

The finance ministry estimates that no more than 90% of 50 million eligible people will sign up for the scheme, which would therefore cost 450 billion baht ($12.4 billion) instead of the earlier estimate of 500 billion baht, Deputy Finance Minister Julapun Amornvivat said Wednesday.

The ministry says the government could therefore potentially completely finance the project from two years of state budget spending and drop plans to borrow. But the plan has to be proposed to the main committee leading the project, led by Prime Minister Srettha Thavisin, on July 15.

“We may not need to borrow from the Bank for Agriculture and Agricultural Cooperatives as earlier planned,” Julapun told reporters in Bangkok after a meeting on the project. 

The plan to distribute 10,000 baht each to roughly 50 million Thai citizens aged 16 years and older is the centerpiece of Srettha’s strategy to boost an economy stuck at an average growth rate of less than 2% for the past decade. Originally scheduled for early 2024, the program has been delayed by problems organizing funding sources and criticized by the Bank of Thailand and some economists for its potential inflationary and fiscal impact.

Julapun said the higher budget allocation from the next fiscal year will not affect overall public investment.

Under the revised plan outlined today, 284 billion baht will be allocated from the budget for the fiscal year starting Oct 1, up from 152 billion baht planned earlier, The remaining 165 billion baht will come from spending tweaks and a supplementary budget for the current fiscal year, Julapun said. 

The government earlier planned to ask the Bank for Agriculture to contribute 172.3 billion baht, paid directly to about 17 million beneficiaries who are mostly farmers. 

Bank of Thailand Governor Sethaput Suthiwartnarueput has stood firm in its opposition to such a broad cash handout plan, asking the government to be cautious on its borrowing. 

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