BANGKOK (Reuters) – Thailand’s 500 billion baht ($13.85 billion) “digital wallet” handout scheme is a necessary stimulus measure to boost a lagging economy held back by low income and high household debt, its finance minister said Wednesday.
Projected economic growth of 2.4% this year is low and a result of structural issues, Pichai Chunhavajira said, adding those problems were being fixed in parallel to stimulus measures to jumpstart the economy, Southeast Asia’s second-biggest.
The scheme is the ruling Pheu Thai party’s flagship policy and was a key vote-winner, but the government has suffered delays in rolling it out due to challenges over funding it.
Some experts, including former central bankers, have called it fiscally irresponsible due to potential impacts on public debt, while the Bank of Thailand has recommended it be targeted more towards vulnerable sectors, rather than a mass handout that will provide only a short-term remedy.
The government denies this and said it would closely adhere to fiscal discipline.
The government was due to announce details on Wednesday how the digital wallet scheme will work ahead of its implementation in the fourth quarter.
It entails transferring credit of 10,000 baht ($277) to 50 million recipients via a smartphone application, to spend in their localities within a six-month period.
($1=36.0700 baht)
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