BOT fears digital wallet will cut Thailand’s credit rating

The BOT’s latest opposition to the scheme came in a written statement to the Cabinet ahead of its weekly meeting on Tuesday.

The statement was leaked on Wednesday after the Cabinet shrugged off the central bank’s concern and approved the scheme in principle on Tuesday.

Expected to cost 500 billion baht (US$13.75 billion), the digital wallet will offer payments of 10,000 baht to almost all Thais aged 16 and above to stimulate spending and kickstart the economy. Prime Minister Srettha Thavisin has announced the scheme will launch in the fourth quarter of this year.

In its latest warning, the BOT told the government that huge debts incurred to fund the scheme could prompt Moody’s to lower Thailand’s credit rating from the current Baa 1 (stable outlook).

The BOT expressed concern that the digital wallet could raise interest-per-expected-revenue beyond the acceptable ratio of 11% next year, prompting Moody’s to cut Thailand’s rating.

A rating below Baa 1 would raise the cost of borrowing by both state and private agencies and could impact foreign investors’ confidence in the kingdom in the long run, it added.

The BOT also warned that the digital wallet scheme’s huge budget could reduce the government’s ability to carry out fiscal manoeuvring in case of economic emergencies.

It noted that the government’s borrowing plan for fiscal 2025 only allowed for 5 billion baht in loans to cover emergencies, compared with over 100 billion baht in previous years.

The government also plans to use most of its central emergency fund from the 2024 budget to fund the digital wallet scheme, meaning there was less money to cover emergencies like natural disasters, the bank argued.

The BOT statement suggested that the 500 billion baht should instead be spent on projects with long-term benefits for Thailand’s economy, such as:

- Training 130,000 doctors and medical personnel.

- Funding a 15-year term of free education for Thai youngsters for the next six years.

- Building 10 more double-track railways.

- Building two more electric railways with a budget of 190 billion each.