Thai government to finance digital wallet scheme with 500 billion baht loan

[webfact]

 

The Thai government has plans to secure a loan of 500 billion baht in order to finance a digital wallet scheme, revealed Prime Minister Srettha Thavisin.

 

This digital wallet scheme is targeted towards Thai citizens who are 16 years and older, earning less than 70,000 baht per month with less than 500,000 baht in bank deposits.

 

The prime minister, during a press conference, stated that this digital wallet scheme could potentially benefit around 50 million individuals, a slight decrease from the initial target of 56 million. Those earning more than 70,000 baht per month with less than 500,000 baht in bank deposits, and those earning less than 70,000 baht per month with more than 500,000 baht in bank deposits will be ineligible for this scheme.

The Thai PM highlighted the urgent need for an economic stimulus in the country, citing that over the past decade, Thailand’s GDP has only seen an average annual increase of 1.9%. Household debt has also surged from 76% in 2012 to 91.6% this year. With the manufacturing sector also experiencing a decline, job losses have been significant.

 

by Puntid Tantivangphaisal

Photo courtesy of Bangkok Post

 

Full story: The Thaiger 2023-11-11

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

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[JBChiangRai]

I hope it will be repaid before their term in office ends.....

[Mike Lister]

8 minutes ago, JBChiangRai said:

I hope it will be repaid before their term in office ends.....

The only way it can be repaid is using tax revenue income, that's where the budget comes from.....think about it.

 

Of course, they could always ask BOT to issue bonds to finance that debt but I don't think there's any precedent for that since they are not actually buying anything, they are simply giving the money away.

[Celsius]

I think it is a great idea.

 

My only question is why not up it to 50,000 baht per handout.

 

Or 1 million?

[ezzra]

26 minutes ago, webfact said:

earning less than 70,000 baht per month with less than 500,000 baht in bank deposits.

A. that will account for nearly 99% of the population,

B. what a digital wallet again and how its suppose to work?

[JoePai]

15 minutes ago, ezzra said:

 

B. what a digital wallet again and how its suppose to work?

Ask a teenager  

[Celsius]

25 minutes ago, ezzra said:

A. that will account for nearly 99% of the population,

 

I did not believe you, so I googled.

 

Then I found Asean Now article stating exactly this.

 

Very unbelievable. Who buys all the condos and cars? If this is all financed on loans then who approves the loans on such a small budget.

 

Crazy.

[dinsdale]

Bt500,000,000,000 loan to hopefully create stimulus which will be over in a week or so once everybody spends the 10k and believe me the 10k won't last long. "Pie in the Sky" comes to mind. 

[Chris Daley]

My girlfriend has won the lottery twice in a row, back to back and got 2,000 baht a time.

 

Not sure if this is money laundering but the Thai government seem to be giving out free money.

Edited November 11, 2023 by Chris Daley

[Ben Zioner]

I've always  thought that Thai politics were low, but borrowing 500 Billion  THB to bribe the people is way beyond anything I could imagine. And if he gets thrown out, the next government will pay.

[ezzra]

45 minutes ago, Celsius said:

 

I did not believe you, so I googled.

 

Then I found Asean Now article stating exactly this.

 

Very unbelievable. Who buys all the condos and cars? If this is all financed on loans then who approves the loans on such a small budget.

 

Crazy.

When you live in Thailand 35+ years like i did you'll come to know a lot of information about this country...

[connda]

41 minutes ago, dinsdale said:

Bt500,000,000,000 loan to hopefully create stimulus which will be over in a week or so once everybody spends the 10k and believe me the 10k won't last long.....

....and then comes the inflation as the money supply in Thailand is amped.  Then over the course of the next couple of years, inflation will claw back the 10K THB and more. 
Expats should enjoy the inflated exchange rate as Thai currency loses value.

I wonder who will holding the bag for the 500 billion THB "loan?"  The bondholders are going to be sorry.
 

[ezzra]

59 minutes ago, JoePai said:

Ask a teenager  

I did asked a teenager and this is what i was told: Digital wallets allow you to pay when you're shopping using your device so that you don't need to carry your cards around. You enter and store your credit card, debit card, or bank account information and can then use your device to pay for purchases. Digital wallets can also store:1. Gift cards. Membership cards.

BUT... how a person who's already find it hard to make ends meet can afford themselves another burden of a loan? is the PM will give free money? no, It's a loan, and a loan you have to repay with interest...

[connda]

5 minutes ago, Ben Zioner said:

I've always  thought that Thai politics were low, but borrowing 500 Billion  THB to bribe the people is way beyond anything I could imagine. And if he gets thrown out, the next government will pay.

"Legalized vote buying" using government funds.  Ethical?  Not at all.  But I seriously doubt that Thai politician are going to pass any laws making this illegal.  Hell, they'll all double down next election.

"Vote For ฿฿฿ The Kee Kwai Party ฿฿฿ and we promise all Thai adults 20,000 THB freshly minted from the Thai treasury if you vote us into office!!!" 

Every Thai political party will get into the action and will bring the Thai economy down to promote their own lust for power and control. 

[connda]

7 minutes ago, ezzra said:

BUT... how a person who's already find it hard to make ends meet can afford themselves another burden of a loan? is the PM will give free money? no, It's a loan, and a loan you have to repay with interest...

Interesting as this is highly inflationary.  Whoever the bondholder(s), they are essentially digging an economic grave with the plans of jumping in.  Inflation hits, rates have to increase to slow inflation, bond holders take the hit.  The bondholder(s) is (are) going to lose money.  I wonder what fools plan to finance this idiotic scheme when you can see the outcome a mile away?

[vivananahuahin]

   Helicopter money  could lead  to over-inflation, a big problem then.

[Mike Lister]

6 minutes ago, connda said:

Interesting as this is highly inflationary.  Whoever the bondholder(s), they are essentially digging an economic grave with the plans of jumping in.  Inflation hits, rates have to increase to slow inflation, bond holders take the hit.  The bondholder(s) is (are) going to lose money.  I wonder what fools plan to finance this idiotic scheme when you can see the outcome a mile away?

I have read that bonds won't be issued to finance this, instead, the government will take a loan from a Government owned bank. Constitutionally speaking there is no precedent whereby the bank is allowed to lend to the government on this scale, doing so would also put the loan and the bank under the gaze of BOT since they have responsibility for all banks and their finding levels. Assuming there is a loan and the interest rate is decent, funding the interest payments out of the annual budget shouldn't be difficult but at some point, the principle must be repaid and I don't see how they can do that.

[smutcakes]

Come back Sonthi and Suthep all is forgiven. 

 

 

[Eric Loh]

21 minutes ago, vivananahuahin said:

   Helicopter money  could lead  to over-inflation, a big problem then.

Inflation unlikely if no supply constraint even if the digital wallet cause demand push. The total package is also small to creat inflation. 

[dinsdale]

1 hour ago, connda said:

....and then comes the inflation as the money supply in Thailand is amped.  Then over the course of the next couple of years, inflation will claw back the 10K THB and more. 
Expats should enjoy the inflated exchange rate as Thai currency loses value.

I wonder who will holding the bag for the 500 billion THB "loan?"  The bondholders are going to be sorry.
 

I would not bank (no pun intended) on the TBT losing strength. 

[new2here]

1 hour ago, connda said:

....and then comes the inflation as the money supply in Thailand is amped.  Then over the course of the next couple of years, inflation will claw back the 10K THB and more. 
Expats should enjoy the inflated exchange rate as Thai currency loses value.

I wonder who will holding the bag for the 500 billion THB "loan?"  The bondholders are going to be sorry.
 

I don’t know that the bond holders will be sorry. Right now, Thai sovereign debt holds - as I recall - mid Investment grade ratings.. and if I’m not mistaken, direct Thai government bonds are “general obligation” debts - thus backed by the governments full taxation ability.  Different than say special purpose bonds which would be backed only by revenue from XYZ project… 

 

To me, the more.. realistic risk, as I see it, isn’t P&I repayment risk, but the risk that someone like Moody’s, Fitch or S&P cut the ratings on this kind of debt, after it’s issuance, causing the yield to rise as the price falls…. making it hard for a bond holder to resell in the secondary market or to use it as collateral for other investments (or margining). 

 

[John Drake]

Quote

In terms of raising funds for the programme, the prime minister revealed that a bill proposing a special loan of 500 billion baht is the most practical approach. 

 

Who's he going to ask? Might try Jay Powell. He gives that out just about every week.

[John Drake]

1 hour ago, vivananahuahin said:

   Helicopter money  could lead  to over-inflation, a big problem then.

 

Start stocking up on non-perishable items now. Get into long term loans and leases, now.

[Ben Zioner]

19 minutes ago, John Drake said:

 

Start stocking up on non-perishable items now. Get into long term loans and leases, now.

Or open FCD accounts.

[khunPer]

Somebody is going to pay 500 billion baht plus interest...

[hotchilli]

4 hours ago, webfact said:

The Thai government has plans to secure a loan of 500 billion baht in order to finance a digital wallet scheme, revealed Prime Minister Srettha Thavisin.

Can I borrow.... now where've I heard that before?

[Dogmatix]

I am curious as to how the exclusion of 6 million people works.  Less than 4 million pay income tax which starts at 25k per month net of basic deductions. So excluding everyone in the tax net is still short by over 2 million people.  So they must be confident there are several million people with extremely low incomes who have over 500,000 in the bank.  If this is really true, they should investigate all of them for income tax evasion.

[Felt 35]

1 hour ago, khunPer said:

Somebody is going to pay 500 billion baht plus interest...

He`s here already 

[Mike Lister]

4 minutes ago, Dogmatix said:

I am curious as to how the exclusion of 6 million people works.  Less than 4 million pay income tax which starts at 25k per month net of basic deductions. So excluding everyone in the tax net is still short by over 2 million people.  So they must be confident there are several million people with extremely low incomes who have over 500,000 in the bank.  If this is really true, they should investigate all of them for income tax evasion.

As with covid payments, I imagine only those people who pay into the social security fund or who are in receipt of some other form of welfare, will be ellieble.

[Phulublub]

3 hours ago, Ben Zioner said:

I've always  thought that Thai politics were low, but borrowing 500 Billion  THB to bribe the people is way beyond anything I could imagine. And if he gets thrown out, the next government will pay.

Clearly a man with his finger on the pulse of most Western democracies, and how not a single one of them tries to bribe voters with their own money in the lead up to an election.  The question is not whether the current UK gubmint will do this to try and get re-elected, but how much.

 

PH