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The government finally introduced its 10,000 digital wallet policy, and it was met with mixed responses, as expected.
If you support the current government and need the money, you would praise it. If you are critical of the Srettha administration, you will find fault in it.
In many ways, many questions still remain, such as whether this is just a populist policy that the Pheu Thai Party needed to regain support following the decision to form a government with the previous junta, which went against the people’s mandate from the previous election.
Alternatively, is it a policy that will stimulate the economy and lay the infrastructure for the digital economy and e-government, resolving the country’s structural issues in the long term as the government claims?
Breaking down the essentials, the policy will inject 600 billion baht into the economy, with 500 billion allocated to give 10,000 baht to 50 million people over the age of 16 whose income is less than 70,000 baht per month and savings less than 500,000 baht through Krungthai Bank’s Pao Tang application.
Those eligible for the scheme must spend the money within 6 months after implementation, and the policy is expected to be implemented in May 2024. The spending area is within the district where your home address is.
The remaining 100 billion baht will be infused into a competitiveness enhancement fund to invest in new technologies and industries such as automotive technology, digital industry, agriculture, biotechnology, and the development of personnel working in education.
Of the 600 billion baht budget, 500 billion baht will come from a loan bill, and the remaining 100 billion baht will come from the 2024 fiscal budget.
The questions here are: will this lead to more public debt or increased inflation, and why not allocate this money to critical areas such as water management to address annual flooding and drought, improve public education, invest in renewable energy, or enhance public transportation to combat air pollution? Additionally, if the government is no longer developing a new application, will the Pao Tang application be upgraded to the super application that the government keeps discussing?
Prime Minister Srettha Thavisin stated that the policy aims to stimulate domestic spending, which has been hindered by the impacts of the pandemic, increased living costs resulting from the Ukraine-Russia war, and high household debts exceeding 90% of the GDP. He emphasized that the policy aims to achieve this within a short period and propel the economy to a growth rate of 5%, surpassing the anticipated 3.5% for the next year. According to him, the anticipated rise in spending is expected to encourage businesses to invest, subsequently leading to the creation of more jobs.
However, you can only use this money to buy goods, food, drinks, and other consumer products. You cannot use it to purchase services, buy online products, pay utility bills, school fees, or change it to cash to pay back your debts.
The questions here are: if I cannot use it to pay bills or repay my debts, how will it help mitigate my financial burdens? The government hopes that businesses like convenience stores will use the money to invest, but what if they don’t? If not, will the policy reach the level of fiscal multiplier that the government hopes for?
However, what if the government is correct?
What if the money does lead to more economic activities, increased job creation, and higher income for people? Not to mention, 10,000 baht is a substantial amount for individuals residing in rural areas, and having it would undoubtedly assist them in purchasing food and other essential items for at least 6 months. Moreover, with additional funds, they might consider investing to enhance their businesses or establish new income channels, aligning with the government’s intended outcomes.
The government is taking a huge gamble here.
Srettha might say that if the policy does not work the way they hope for, the government will be the one suffering from it. What he got wrong on this aspect is that it will be the taxpayers who will suffer for it because they will have to be the ones to pay back the money.
At the same time, the loan bill might be against the charter and fiscal discipline act that the Move Forward Party pointed out, but such an argument from the main opposition is expected since they have to lay down some grounds for the debate on this policy in parliament.
From the look of it, the government should have no problem pushing this loan bill through because they have the majority in Parliament.
And if there is a petition for the Constitutional Court to rule on its constitutionality, past records showed that the court’s rulings often go along with the establishment side, and the argument that will be used is that the money is needed to help solve an economic crisis that the government believes to exist.
If the loan bill passes, I hope that the policy will achieve all of its targets because it will be beneficial for the economy and the people. I also hope that its negative impacts on the country’s financial stability will be minimal, given the uncertainties in the global economy, including high inflation in many countries, rising interest rates, and China’s economic slowdown.
If the policy fails to stimulate domestic consumption, we will become even more dependent on exports and tourism, as these sectors rely heavily on the global economy. In the event of another downturn in the global economy, we would be left without a sufficient economic engine to cope with threats, such as a potential rise in energy prices due to ongoing geopolitical conflicts in Europe and the Middle East.
Let’s just say policy failure is not an option here because it would place us in an even more precarious position, and we would all be doomed if anything else were to happen to the global economy.