Thailand moves closer to cash stimulus programme with funding plan

THAILAND has inched closer to handing out about US$13.5 billion in cash to its citizens, with the Cabinet approving a revised debt plan that includes funding for the government’s main stimulus measure.

The Cabinet on Tuesday (Jul 2) approved the second revision of a public debt plan, with new borrowings rising by 276 billion baht (S$10.17 billion) to 1.03 trillion baht. About 122 billion baht will partially finance the 500 billion baht digital wallet, which is scheduled to be implemented later this year, government spokesperson Chai Wacharonke told a briefing. 

Thailand’s public debt after the latest funding plan is still well below the 70 per cent of GDP ceiling, Chai said. As of end-May, the public debt-to-GDP ratio stood at 64.3 per cent.

The cash handout is the centrepiece of Prime Minister Srettha Thavisin’s strategy to lift the economy out of a sub-2 per cent average economic expansion in the past decade. The plan – opposed by the Bank of Thailand (BOT) and some economists for its potential inflationary and fiscal impact – calls for the distribution of 10,000 baht each to roughly 50 million Thai citizens aged 16 years and older to spur growth.

The central bank, which is already at odds with Srettha over his push for lower interest rates, had urged the government to limit the benefit to those in need. 

“If you want to do the scheme, it is better to do it in a targeted way and also a smaller way,” BOT governor Sethaput Suthiwartnarueput said in an interview in June.

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But Srettha, whose government had sought to distribute cash earlier this year, has argued that the digital wallet will have a “whirlwind” impact on the economy, lifting both consumer spending and sentiment.

Private consumption and tourism have been picking up, though the central bank’s forecast of 2.6 per cent gross domestic product growth this year still falls short of the government’s 3 per cent target.

Under the revised borrowing plan, existing debts, which will be restructured during the fiscal year ending Sep 30, will rise by 33.4 billion baht to 2.04 trillion baht, while debt repayment will also be increased by 54.6 billion baht to 454.2 billion baht, according to an official document released Tuesday.