Thai PM Announces $16B ‘Digital Wallet’ Cash Handout to Boost Struggling Economy
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In Brief
New Prime Minister Srettha Thavisin plans to inject 560 billion baht ($16 billion) into Thailand’s economy over the next six months.
In a bold move designed to reinvigorate Thailand’s flagging economy, new Prime Minister Srettha Thavisin has announced a sweeping financial plan.
The 560 billion baht ($16 billion) cash handout strategy aims to stimulate domestic demand and investment over the next six months.
This move comes against the backdrop of a financial market skeptical of the government’s strategies and an economy grappling with challenges ranging from household debt to sluggish growth.
What Does the Thailand Government Offer?
The government plans to distribute 10,000 baht to all Thai adults aged 16 and above. Recipients must spend this money on particular goods and services within their local communities within a specific timeframe. On top of this, the government has also proposed energy price cuts and debt relief for farmers and small businesses.
According to government officials, the “Digital Wallet Plan” could have an economic multiplier effect as high as four times the original handout. Such an impact could potentially elevate Thailand’s economic growth rate to 5% next year, up from the modest 2.8% forecast for this year.
High Risk of Failure
The announcement initially failed to bring about a significant positive effect on the Thai financial markets, which had previously experienced foreign investor exits following election-related upheavals. The nation’s benchmark stock index dropped by 0.5% after initially opening higher, while the Thai baht maintained its 0.4% gain against the U.S. dollar.
Opposition parties have expressed reservations about the plan, primarily due to the government’s vagueness concerning the specifics and timelines for the policy’s implementation. Such uncertainty, they argue, could lead to ineffective application and unforeseen setbacks.
Hidden Problems of Thailand’s Economy
Thavisin’s government plans to fund this ambitious project through the state budget and additional taxes, expressly avoiding new borrowing. Despite this, analysts from financial institutions like Bank of America Securities and Nomura Holdings Inc. warn that the plan may widen Thailand’s fiscal deficit, thereby limiting its ability to handle future economic shocks.
The newly formed government also faces the challenge of substantial household and public debt, amounting to 90% and 61% of the country’s GDP, respectively.
Big Economic Recovery Plans
In the immediate future, the government aims to boost tourism revenues by relaxing visa requirements and waiving fees for travelers from specific countries. It also intends to call a referendum to overhaul the nation’s constitution.
Additional future goals include developing special economic zones, creating a matching fund for investing in startups, and expediting free-trade agreements with multiple regions.
The $16 billion digital wallet plan is undoubtedly a high-stakes gamble by the Thai government to resuscitate an economy facing multiple headwinds, both domestically and internationally. Whether this bold move will pay off in reinvigorating the economy as intended remains to be seen, but what is clear is that the government is willing to make ambitious moves in pursuit of economic revitalization.
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Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
More articlesNik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.
