The Bank of Thailand (BoT) has sent an urgent letter to the government advising it to downsize the “digital wallet” scheme by only providing the 10,000 baht benefit to about 15 million so-called “financially fragile” people, instead of the 50 million people as currently planned.
This would enable the plan to be implemented immediately and would only cost 150 billion baht, according to the BoT.
The government has, however, shrugged off the central bank’s last-minute call, saying that there is nothing new in its recommendations.
The central bank reasoned that these “fragile” people, who include low-income earners and holders of the state welfare cards, tend to spend more on consumption and buy more locally-produced products than other groups and the 10,000 baht would help ease their financial burden and stimulate the economy more efficiently.
It also recommends that the digital wallet scheme be implemented in phases, which would reduce the impact on fiscal stability.
It warns that the scheme, which will cost about 500 billion baht in its current form, will produce a long-term fiscal burden, put Thailand at risk of a credit rating downgrade by Moody’s and a loss of confidence in investment in Thailand if the government cannot maintain the stability of public sector debt.
The planned allocation of money from the 2024 fiscal budget to fund the scheme will also reduce the reserves of the Central Fund for use in emergency situations, to the level that there won’t be enough money to cope with an actual emergency, should one arise, such as an extreme natural disaster, said the central bank.
The BoT goes on to say that the 500 billion baht should be spent on more worthy projects, which address structural problems and increase long-term economic potential.
Citing its capacity as the regulator of special financial institutions, such as the Bank of Agriculture and Agricultural Cooperatives (BAAC), the central bank noted that the government has designated the BAAC to support the digital wallet scheme, despite the fact that it still owes the bank a staggering 800 billion baht, which may put the bank at risk of liquidity problems and significantly affect its operations and the confidence of depositors.
The central bank also expressed concerns over the system to be used in the scheme, its vulnerability to cyber attack, leaks of information on private individuals and business transactions. It recommends that measures to address these potential intrusions be announced with immediate effect.
Finance Permanent Secretary Lawaron Saengsanit said, however, that the central bank’s letter will not have an effect on the scheme because it has already been approved by the cabinet.
He said that all the recommendations in the letter have already been addressed by the central bank’s governor and the Digital Wallet Scheme Policy Committee has already responded to the central bank.
The scheme will go ahead as scheduled and the 10,000 baht benefit will be distributed to about 50 million Thais in the fourth quarter of this year, said Lawaron.
