The launch of a 145-billion-baht handout programme to needy people next week is certain to give a “jolt” to the economy, Prime Minister Paetongtarn Shinawatra said on Tuesday, as her government promised more stimulus measures ahead.
The cabinet on Tuesday formally approved the distribution of 145 billion baht, or about one-third of the total planned in the original “digital wallet” scheme, starting on Sept 25.
Low-income earners and vulnerable groups will be the first recipients to kick-off the vaunted stimulus drive for the economy, which grew by just 1.9% last year, far adrift of peers.
The beneficiaries will include 12.4 million state welfare cardholders and 2.15 million people with disabilities, Finance Minister Pichai Chunhavajira told a briefing after the cabinet meeting.
Less than 40 million Thais over age 16 are now expected to sign up to receive payments of 10,000 baht each, mostly via a smartphone application, to be spent within six months in their communities. That is down from 45-50 million estimated earlier.
Prime Minister Paetongtarn Shinawatra arrives at Government House to chair her first cabinet meeting on Tuesday. (Photo: Chanat Katanyu)
About 14.5 million people will receive payments next week, directly to their bank accounts via PromptPay, according to the Ministry of Finance.
“From the figures we found, the first vulnerable group that receives 10,000 baht have a high spending rate and so there will certainly be a jolt to the economy,” Ms Paetongtarn told reporters.
The first injection will increase economic growth by 0.35 percentage points, said Pornchai Thiraveja, head of the Fiscal Policy Office.
The measure is the flagship policy of the coalition-leading Pheu Thai Party, which is keen to boost an underperforming economy shackled by high household debt, weak spending and a slow recovery in exports.
The Bank of Thailand expects the economy to grow just 2.6% this year.
Deputy Finance Minister Julapun Amornvivat said the digital aspect of the handout would continue because it was part of the government’s plan to create a digital economy, which would include a blockchain-backed payments infrastructure.
Mr Pichai said the timing and method of payment of the second phase of the handout is currently under review, adding there would be more stimulus measures to follow.
Ms Paetongtarn, who took office earlier this month, faces the challenge of shoring up growth in an economy stifled by near-record household debt, an influx of cheap products from China and weak exports.
The funding for the handout will come from the 122-billion-baht supplementary budget and part of the annual budget for the 2024 fiscal year ending on Sept 30, Mr Pichai said.
In related news, market sources and a government presentation seen by Reuters indicate that the government plans to increase borrowing by 8% to about 2.6 trillion baht for the 2025 fiscal year starting on Oct 1.
Of the projected total, 1.06 trillion baht will be new borrowing and 1.53 trillion will be debt being rolled over, according to the sources, who declined to be identified because the information was not public.
The government plans to sell about 1.25 trillion baht of government bonds and 520 billion baht of treasury bills in the 2025 fiscal year, which will fund more than two-thirds of the borrowing target, the sources said.
