(Bloomberg) — Thailand will hand out 560 billion baht ($16 billion) to its 55 million adults over the next six months to boost domestic demand and investment, with new Prime Minister Srettha Thavisin calling the revival of a sluggish economy the top of his government will appoint. priority.
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All Thais aged 16 and over will each receive 10,000 baht, which they can spend on specific goods and services in their area within a certain period. The government will also soon cut energy prices and offer a debt moratorium to farmers and small businesses struggling with debt burdens, Srettha said in a customary policy statement made in parliament on Monday.
The so-called digital wallet plan “will act as a trigger that will reawaken the country’s economy,” Srettha said. Adding the handout will ensure an even distribution of the money across all sectors of the economy.
The first working meeting of Srettha’s cabinet on Wednesday is likely to approve some of the measures outlined by the prime minister in parliament.
The digital wallet program – set to be rolled out in the first quarter – is the main election promise of Srettha’s Pheu Thai party and officials say the multiplier effect on the economy could be four times as large as the benefit and economic growth following years could increase to the same amount. high as 5%, compared to the expected 2.8% for this year.
Srettha, a former real estate magnate who is also finance minister, faces the challenge of boosting growth amid declining demand for his goods from his top trading partner China, and lower-than-expected revenue from foreign tourists. The 11-party coalition government also faces the prospect of a rise in inflation as drought threatens to limit harvests of crops such as rice and sugar.
Thailand’s financial markets, which had seen an exodus of foreign investors in the wake of post-election unrest, were largely neutral on the policy announcement. The benchmark stock index fell 0.5% after opening higher at 11:26 am in Bangkok, while the baht maintained its 0.4% gain against the US dollar.
While Srettha’s policy statement marks the end of a government formation process and a months-long political deadlock that followed May’s general elections, the new leader must now quickly approve a budget for the financial year starting October 1. He also has to deal with the household issues. The national debt is 90% of gross domestic product and public debt is 61% of GDP.
The government plans to finance the digital wallet program through the state budget and additional taxes from the program, without resorting to new loans. But economists at Bank of America Securities and Nomura Holdings Inc. say the spending plans will widen the budget deficit, limiting the country’s room to absorb future shocks.
The opposition Move Forward party criticized the government for failing to specify details and set deadlines for the implementation of the newly announced initiatives. “If this policy statement is some kind of Global Positioning System, the nation is likely to get lost,” said Sirikanya Tansakun, deputy leader of the Move Forward.
Short-term priorities for the Srettha government include boosting tourism revenues by easing visa procedures and fee waivers for travelers from selected countries. The country also plans to hold a referendum on revising the country’s constitution, he said.
Highlights of other priorities:
Work with the military to transition to a voluntary military service, reduce the number of senior officials, and modernize the weapons procurement process
Establishing four new special economic zones to spread the benefits of economic development
Establishment of a ‘Matching Fund’ with the private sector to invest in start-ups
Accelerating free trade agreements with the European Union, countries in the Middle East, Africa and South America and India
Relaxation of rules for foreign workers and skilled workers to meet rising demand
Take measures to tackle the threat of air pollution
Removing and improving outdated laws, including lifting restrictions on the production of homegrown alcohol
(Updates with market performance in seventh paragraph, opposition commentary in 10th paragraph.)
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