New Thai leader to scrap $18.5b cash handout, media reports say

BANGKOK – Thailand’s key economic stimulus – an almost US$14 billion (S$18.5 billion) cash giveaway to its citizens – is poised to be abandoned by the next government under the daughter of former premier Thaksin Shinawatra, according to local media reports.

Mr Thaksin told the ruling Pheu Thai Party and his daughter, Ms Paetongtan Shinawatra,

voted by the Parliament on Aug 16 as prime minister

, to drop the plan, the Nation reported, citing a party official it did not identify.

Earlier this week,

the court disqualified previous leader Srettha Thavisin

.

Mr Thaksin’s move was seen as a way to shield his daughter from any adverse fallout from the cash stimulus, which had become contentious even before it was implemented due to questions over funding.

In 2017, a Thai court found former leader Yingluck Shinawatra, Mr Thaksin’s sister, personally and criminally responsible for a policy to subsidise rice farmers.

The cash handout was a flagship campaign promise of the Thaksin-backed Pheu Thai party and the centrepiece of Mr Srettha’s push to help the economy grow annually at 5 per cent, like many of the country’s South-east Asian neighbours.

Yet disagreements, including with the central bank and some lawmakers, over how the massive stimulus will be funded – as well as the impact on inflation – have delayed its implementation.

“If it runs into legal issues and someone lodges a petition against it, there’s a risk that she can go to jail,” said Associate Professor Punchada Sirivunnabood from Mahidol University in Thailand. “If you go ahead with this plan, that’s one foot in prison already.”

When asked about it by reporters on the eve of her nomination as PM, Ms Paetongtarn only said she would review the programme after she took power. 

Mr Srettha’s dismissal and Mr Thaksin’s disapproval have put the plan in serious doubt, even as Parliament is close to approving an additional budget in 2024 to fund the initial roll-out.

This comes as the government is set to report still-lacklustre gross domestic product growth in the second quarter despite an influx of tourists.

Growth in South-east Asia’s second-largest economy has averaged below 2 per cent in the past decade, hobbled by massive household debt and a deteriorating manufacturing sector handicapped by cheap imports mostly from China.

The economy likely grew 2.1 per cent in the second quarter from a year ago, according to a median estimate of economists ahead of the announcement on Aug 19.

How Thai citizens will react to the ditching of the handout remains to be seen. Almost 30 million have already registered to receive the cash gift of 10,000 baht (S$380) for every Thai 16 years old and above, ahead of the planned start of implementation in November.

The next administration will probably roll out more direct stimulus measures to replace the broad handout, according to reports. BLOOMBERG