Thai Economic Challenges Prompt Government’s Urgent Stimulus Plan: Digital Wallet Scheme to Boost Growth and Unemployment

Thai Prime Minister considers funding options for $13.7 billion stimulus package to bolster economy

Thai Prime Minister Srettha Thavisin has announced that the economy is facing challenges and needs a boost from a proposed handout scheme worth 500 billion baht ($13.7 billion). This scheme, known as the “digital wallet” plan, would involve transferring 10,000 baht ($275) to 50 million Thais to be spent within six months. However, concerns about the funding for this scheme have arisen, with some experts questioning its fiscal responsibility.

The government has decided to delay the distribution of funds until the fourth quarter of the year, pushing back from the initial timeline of May. Srettha revealed that the finance ministry and the Budget Bureau have been tasked with exploring potential funding sources for the scheme, in addition to considering a borrowing bill. He emphasized the importance of boosting the economy, which has experienced low growth over the past decade.

In recent days, the state planning agency has revised its 2024 growth outlook due to unexpectedly contracting in the final quarter of 2023 and full-year growth at 1.9%, below the 2.5% growth in 2022. The new projection ranges from 2.2% to 3.2%, down from the previous estimate of 2.7% to 3.7%. The government plans to discuss further details on funding sources for this scheme at its next meeting on April 10th.

Despite recent approval of budgets for fiscal years ending March and June this year by parliament’s finance committee and senate respectively, challenges remain in securing a borrowing bill to finance this handout program.

Srettha has labeled this situation as an economic crisis that requires urgent stimulus measures while central bank Governor has expressed a different viewpoint acknowledging slower-than-expected growth and structural issues in their economy.

The government’s move towards increasing spending comes after an announcement made by Finance Minister Suan Tungkruangkit last month regarding his plans to increase spending by Bt1 trillion ($33 billion) through various measures such as tax cuts and subsidies.

This move is aimed at boosting economic growth amid rising unemployment rates and slowdowns in major industries like automotive manufacturing and tourism.

Despite these efforts however, some economists argue that such measures may not be enough as they fail address underlying structural issues such as weak exports and high levels of debt.

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