Thailand’s New Government Distributes Cash Benefits

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The political landscape in Thailand has undergone significant shifts this year, marked by the emergence of young democrats who secured more seats than any other party in the May elections. Despite their electoral success, they faced challenges in forming a government, with the army establishment, which had controlled Thailand for over a decade, obstructing their efforts through constitutional manipulations.

The subsequent collaboration of the military with Pheu Thai, the party led by the ousted former Prime Minister Thaksin Shinawatra, added complexity to the political dynamics. Thaksin, who was overthrown in a 2006 coup, returned to Bangkok after Pheu Thai reached an agreement with the army in August. The king reduced Thaksin’s prison sentence, and he is now serving it in a hospital’s luxury wing. The current government, led by former property tycoon Srettha Thavisin, has diverged from the democratic reform agenda sought by the majority, focusing instead on populist economic policies.

Key initiatives include reductions in electricity prices, debt suspension for farmers, and the implementation of a digital wallet scheme. The latter, a flagship promise of Pheu Thai, aims to distribute 10,000 baht ($285) to approximately 50 million Thais, stimulating spending at businesses near their registered addresses. This economic stimulus package, amounting to around $14 billion, equating to roughly 3% of Thailand’s GDP, is scheduled for launch in May next year.

Critics, including former central bank governor Veerathai Santiprabhob and over 100 economists, have raised concerns about the digital wallet scheme. They argue that it represents a series of spendthrift and distortionary policies. The opposition, represented by Move Forward, calls for addressing Thailand’s structural issues, particularly breaking up monopolies dominating various industries. However, given Pheu Thai’s dependence on establishment support, significant structural changes seem unlikely.

Despite the government’s push for economic stimulus, the National Economic and Social Development Council (NESDC) revised its growth forecast for 2023 to 2.5%, acknowledging challenges in the country’s existing cash-transfer programs. Previous unconditional handouts to the poor, initiated by the military government in 2017, have faced implementation issues, with a significant portion of the poor not receiving the intended benefits.

Move Forward proposes alternative stimulus measures, emphasizing smaller investments to boost local economies, such as improving the quality of Thailand’s tap water. The divergence in policy priorities highlights the ongoing complexities in Thai politics, with economic considerations often taking precedence over broader structural reforms.