(Bloomberg) -- Thailand expects the rollout of a long-delayed cash handout to most adult citizens to help reverse a slump in economic activities and tackle the highest household debt in Southeast Asia.
The distribution of 10,000 baht ($277) each to all Thais 16 years and older under a certain income threshold in the fourth quarter will fire up purchasing power, revive manufacturing and boost overall confidence in the economy, Finance Minister Pichai Chunhavajira said at a briefing in Bangkok Wednesday.
Beneficiaries can sign up for the so-called digital wallet from Aug. 1 to Sept. 15 through an application called “Tang Rath.” Consumers can spend the cash at more than 2 million retail outlets, convenience and mom-and-pop stores under the scheme, aimed at helping both individuals and small businesses, though strict curbs include a ban on using the money to buy alcohol or cannabis.
The handouts, the centerpiece of Prime Minister Srettha Thavisin’s efforts to revive growth and the fortunes of the ruling coalition, were originally intended for early 2024, but were delayed by wrangling over how Thailand would pay for the stimulus. But lawmakers last week backed plans for an additional 122 billion baht of spending this fiscal year to fund the digital wallet.
“This is not just a normal cash handout,” Pichai said. “It’s a stimulus that encompasses all levels of economic activities, which will lead to more income generation and generate additional tax revenue for the government to do other things.”
Key details of the program:
- Cash can’t be used for purchase of alcohol, tobacco, cannabis, lottery, gold, diamond, natural gas, fuel, electronic devices and some other goods
- More than 2 million shops can join the program; registration opens Oct. 1
- Citizens have to buy products in shops located within districts where they reside
- Money can’t be used for online purchases of goods
- Registered merchants and vendors allowed to transact among themselves without any restrictions
- Annual income limit set at 840,000 baht as of last year for participants
- People with more than 500,000 baht in savings in banks as of March 31 can’t participate in the digital wallet
The government originally expected to spend about 500 billion baht on the stimulus as there are 50.7 million people eligible for the program. But officials have since said they only expect a take-up rate of at most 90%, lowering the cost to about 450 billion baht.
The funding will come from the state budget over two fiscal years. Of the total, 165 billion baht will come from the current fiscal year budget, which will end Sept. 30 and the remaining 285 billion baht will come from the next fiscal year. Issuing a supplementary budget is also among the government’s options to raise funds, according to Deputy Finance Minister Julapun Amornvivat.
If effective, authorities predict the stimulus will lift the growth rate in Southeast Asia’s second-largest economy, which has averaged less than 2% annually for the past decade. Thailand’s recovery from pandemic had been hurt by a slump in manufacturing and exports with tourism being the sole bright spot in the economy.
While headline inflation has stayed below the central bank’s target range in the past year, prompting repeated calls for a rate cut from the government, the Bank of Thailand has cited household debt leves above 90% of gross domestic product as among the reasons to hold the cost of borrowing at the highest level in a decade.
Thailand’s household debt has soared about a fifth to 16.37 trillion baht, or 90.8% of the nation’s GDP as of end-March, from less than 14 trillion baht before the pandemic, central bank data show.
(Updates with more details from the third paragraph.)
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