The Thai government is moving forward with its ambitious 10,000-baht cash handout scheme, with plans for the third phase involving the use of digital payment platforms, as confirmed by Deputy Finance Minister Julapun Amornvivat. This initiative is part of the government's broader strategy to stimulate the economy, which has been stagnant for over 15 years, characterized by low GDP growth and high household debt.
First introduced as part of the government's digital wallet policy, the scheme has undergone two phases. The initial phase distributed funds to 14.5 million individuals who hold state welfare cards and disability cards. Now, as the second phase prepares to kick off, it aims to provide funds to around 4 million senior citizens aged 60 and above, with disbursements anticipated before January 29, 2025.
Distribution for this second phase is expected to cost approximately 40 billion baht and will be executed via cash transfers using the PromptPay system alongside the government's Tang Rat app, which plays a pivotal role in recipient registration.
The pivotal third phase of the handout scheme will see funds being sent through digital payment platforms. To qualify, recipients must be Thai nationals aged 16 or older, with annual incomes capped at 840,000 baht and bank deposits below 500,000 baht. Testing of this payment system by the government and the Bank of Thailand is set to commence in February 2025, with transfers slated to begin later the same year.
Julapun emphasized the need for thorough testing to maintain payment stability, explaining how the Digital Government Development Agency collaborates with private consultants to develop the necessary infrastructure. "We are ensuring the system meets standards comparable to commercial banks, ensuring public trust," he stated.
Further plans include enhancing accessibility for individuals without smartphones, aiming to mitigate any barriers to participation.
Despite the government's intentions, the initiative faces skepticism. The Bank of Thailand raised concerns about the growing fiscal deficit associated with the scheme. Its governor cautioned against the need for extensive borrowing for economic stimulation, advocating instead for targeted assistance for vulnerable groups rather than blanket distributions.
Finance Minister Pichai Chunhavajira defended the scheme, arguing for its necessity due to the prolonged economic downturn. With average GDP growth grim, sitting at just 1.9% over the past decade, and household debt skyrocketing beyond 90% of GDP, infusing cash directly was deemed necessary.
Originally, the digital wallet project was expected to have a budget of 500-600 billion baht, but with eligibility adjustments based on income, the budget was trimmed to 450 billion baht. Those eligible now must have incomes below the stipulated annual cap, and following registration, only around 36 million people signed up by the September 15, 2024 deadline, highlighting the gap between potential beneficiaries and actual registrants.
The plan to give funds initially to all Thais was revised to prioritize vulnerable population segments, including state welfare cardholders and the elderly, reflecting the government's attempt to hone its focus amid financial scrutiny.
Recent developments have also included urgent advice from the Bank of Thailand to the Cabinet, encouraging them to optimize the handout's economic impact and to implement more investments aimed at enhancing long-term competitiveness and efficiency. This demand highlights the push-pull dynamic between immediate financial aid and sustainable economic growth strategies.
Terms of the cash handouts require recipients to spend their allocated funds within their district initially, steering economic stimulation right where it occurs. The rationale is to spur local economies and mitigate the unfavorable effects of prolonged stagnation.
While the Finance Ministry continues its preparations, discussions with related agencies are necessary to finalize the registration processes for those primarily affected, especially old citizens not equipped with digital devices.
Hence, as anticipation mounts for the launch of this groundbreaking initiative, the Thai government finds itself balancing economic need against financial prudence, with its credit ratings looming as potential consequences for any missteps. With this unique approach to addressing socioeconomic issues, observers await to see if the long-dormant economic engine of Thailand will finally rev up through its ambitious cash handout scheme.
This plan's efficiency is closely monitored with advice from the Bank of Thailand, ensuring the handouts are not only timely but also beneficial for the overall economic health of the nation.
