Thailand’s $14bn cash handout to be abandoned under new leadership

Thailand’s key economic stimulus -- an almost $14 billion cash giveaway to its citizens -- is poised to be abandoned by the next government under the daughter of Thaksin Shinawatra, according to local media reports, reports Bloomberg.

Thaksin told the ruling Pheu Thai party and his daughter, Paetongtan Shinawatra, voted by the parliament on Friday as prime minister, to drop the plan, the Nation reported, citing a party official it didn’t identify. Earlier this week, the court disqualified previous leader Srettha Thavisin.

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, Thaksin’s sister, personally and criminally responsible for a policy to subsidize rice farmers.

The cash handout was a flagship campaign promise of the Thaksin-backed Pheu Thai party and the centerpiece of Srettha’s push to help the economy grow annually at 5.0 per cent like many Southeast Asian neighbors. Yet disagreements including with the central bank and some lawmakers over how the massive stimulus will be financed -- as well as the impact on inflation -- have dogged 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 Punchada Sirivunnabood, an associate professor at 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, Paetongtarn only said she would review the program after she took power.

Srettha’s dismissal and Thaksin’s disapproval puts the plan in serious doubt, even as the parliament was close to approving additional budget this year to fund the initial rollout. This comes as the government is set to report a still-lackluster gross domestic product growth in the second quarter despite the influx of tourists.

Growth in Southeast Asia’s second-largest economy has averaged below 2.0 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 Monday.

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 ($285) for every Thai 16 years old and up 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.