Thailand’s ambitious digital wallet handout scheme, aimed at revitalizing the economy, has generated considerable debate and controversy. Prime Minister Srettha Thavisin’s government plans to implement a $14.3-billion cash handout program by May 2024. This program aims to distribute 10,000 baht (approximately $285) to each Thai citizen over 16, amounting to around 50 million recipients. The initiative, part of the Pheu Thai party’s election campaign, is designed to spur consumption and promote economic growth, particularly targeting a growth rate of at least 5% annually for Southeast Asia’s second-largest economy.
The scheme, however, has not been without its challenges and criticisms. The Office of the Council of State, providing legal advice to the government, found no legal obstacles to the plan, but the Council’s report, which will not be publicly released, has led to varied interpretations. The Council reportedly advised that if the government deemed the economic situation dire enough for such a measure, it should have been enacted by decree instead of proposing a bill to borrow the necessary funds. Funding the plan through legislation could delay its implementation by months. There are also concerns regarding the plan’s legality and financial prudence, with some opposition members deeming it a risky and possibly unconstitutional election strategy. The Thai Chamber of Commerce, however, anticipates that the scheme could add 1.0-1.5 percentage points to Thailand’s economic growth in 2024.
The digital wallet scheme has been termed ‘fiscally irresponsible’ by some economists and former central bank governors, warning that it might fuel inflation. The plan’s delay was announced in October, attributed to complications in funding and slower-than-anticipated development of the ‘super-app’ wallet meant to facilitate the fund distribution. This electronic currency, interestingly, will not be convertible into cash and will require a mandatory Know Your Customer procedure, costing each user 100 baht ($2.86). Notably, the digital baht being used for the scheme is not a central bank digital currency (CBDC), as Thailand launched a CBDC sandbox in June but has no immediate plans to launch a CBDC.
This digital money giveaway presents a complex situation where the intersection of innovative financial technology, political ambition, and economic stimulus measures collide. It exemplifies the evolving role of digital currencies in government policies and raises important questions about the balance between economic stimulation and fiscal responsibility.
This is a DAO submission authored by James
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