Thailand plans to boost state spending by $3.4 billion for a digital wallet program, providing cash handouts to 50 million citizens to stimulate the economy despite concerns about inflation and fiscal risks.
Thailand’s Stimulus Budget
Thailand is set to implement a supplementary budget of $3.4 billion to boost state spending and revitalize the economy. The key initiative of this budget is a digital wallet program that will provide 10,000 baht to approximately 50 million Thai citizens in the fourth quarter, aiming to stimulate economic activity.
Challenges and Criticisms
- The government’s decision to increase the budget for cash stimulus has drawn criticism due to potential inflationary impact and risks to fiscal consolidation. However, the government is focused on preventing delays in public expenditure and combating the threat of a technical recession.
- The supplementary budget will widen the fiscal deficit and be funded through a combination of increased deficit, enhanced revenue collection, and gradual borrowing over several years to support the digital wallet program and overall economic revival.
Impact on Economy and Bond Market
By increasing the budget deficit to support the stimulus measures, the government aims to boost economic activity and address any downturn. To minimize the impact on the bond market, borrowing will be spread out over a longer period. This strategy aims to prevent excessive pressure on interest rates and potential negative consequences in the financial market.
Source : Thailand to add $3.4 billion to budget to fund cash handout plan