Introduction
Recent announcements regarding the rules for the 10,000-baht digital wallet handout have addressed concerns about public and household debt in the country. While this has eased worries about fiscal positions and credit ratings, it may have a negative impact on economic growth and certain sectors. This article will explore the details of these rules and analyze their potential implications.
New Rules for the Digital Wallet Handout
The digital wallet scheme will now prioritize low-income earners, with a monthly salary cap of 25,000 or 50,000 baht. Additionally, a subcommittee has recommended limiting the handouts to the 16 million people who have state welfare cards or individuals who meet specific wealth criteria based on income or savings. By implementing these eligibility criteria, the estimated cost of the project has been reduced from 560 billion to 160 billion baht.
Easing Public Debt Concerns
The adjustment in the eligibility criteria for the digital wallet handout has alleviated concerns about the public debt-to-GDP ratio, which currently stands at 61.8{4dbbffb7ff6e7fb0ccf569e586cac957305ffa8ee172700c59e45cf92501f7cb}. It is also expected to reduce household debt, which exceeds 90{4dbbffb7ff6e7fb0ccf569e586cac957305ffa8ee172700c59e45cf92501f7cb} of GDP. This development has been positively received by Asia Plus Securities (ASPS), as it improves the country’s fiscal position and credit rating.
Potential Impact on GDP Growth
While the new rules for the digital wallet handout address debt concerns, they may have some negative effects on the country’s GDP growth forecast for 2024. Analysts suggest that the revised eligibility criteria could result in lower GDP growth, which is already expected to fall short of the Bank of Thailand’s target of 4.4{4dbbffb7ff6e7fb0ccf569e586cac957305ffa8ee172700c59e45cf92501f7cb}. This could have implications for the overall economic performance of the country.
Effects on Domestically-Focused Stocks
The adjusted eligibility criteria for the digital wallet handout may also impact certain sectors and stocks. According to ASPS, stocks in banking, retail, travel, transport, and food sectors are expected to benefit from the scheme. However, with the limitations on eligibility, these stocks may experience negative sentiment. This could have implications for investors and market performance in these sectors.
Additional Perspectives
Finansia Syrus Securities suggests that the proposed options for reducing the number of eligible recipients could lower the project’s budget to 150-490 billion baht. Krungsri Capital Securities (KCS) supports the guidelines for distributing the money to families with incomes of less than 50,000 baht as a positive move to address growing public debt and Thai bond yields. Based on study recommendations from Krungsri Research, the digital wallet handout should also be given to individuals with monthly expenses greater than their income, people with existing debts, and those with a household income of less than 50,000 baht.
KCS argues that redistributing money to these groups will help stimulate the economy by recirculating funds more effectively than handing it to those without financial problems. However, the clarity of the policy regarding the targeted groups for the handouts will likely impact stocks in the retail, banking, and leasing sectors.
Conclusion
The new rules for the digital wallet handout have provided clarity and alleviated concerns regarding public and household debt. While these changes may have a positive impact on the country’s fiscal position and credit rating, they may pose challenges to GDP growth and certain sectors. It remains to be seen how these adjustments will influence the overall economic landscape and market performance in the coming years.
