On Tuesday 19 April, at its weekly cabinet meeting, the Thai Government approved the Finance Ministry’s request for an additional THB 3.04 billion in funding for its Rao Chana (‘We Win’) stimulus program and extended its duration by one more month until 30 June 2021.

This program initially allocated with THB 210.20 billion in funding was launched earlier this year with the intention of providing one-off handouts of THB 7,000 to eligible applicants covering roughly 31.1 million Thai citizens affected by the COVID-19 pandemic until the end of May. The Thai Cabinet’s approval has now extended the deadline by which the subsidy must be used until the end of June, increased the program budget to THB 213.24 billion and expanded eligibility to the handouts to cover an additional 2.4 million people. Most of the newly eligible will comprise the elderly, citizens without access to smartphones, those confined to medical facilities (e.g. bedridden patients) or vulnerable people otherwise in need of special assistance. This means that roughly 33.5 million Thais are now eligible to apply for this financial aid scheme.

Typically, the THB 7,000 allowance is transferred to qualifying applicants via the Pao Tang application and can then be used to purchase essential goods, food, drinks and other household supplies using the application wallet. This program excludes those with income of THB 300,000 or more per year (or those with savings of over THB 500,000) as of 31 December 2021, government officials, workers in state enterprises or social welfare recipients.

The impetus for the increased funding and widened scope of the program stems from the new wave of COVID-19 which has now struck Thailand. Naturally, this has heightened concerns among the public about further outbreaks bringing with them the knock-on effects of reduced levels of consumer spending, confidence and stagnating economic activity. This program (among others) is designed to extend support to those hit hard by COVID-19 and subsequent outbreaks, stimulate consumer activity and small businesses and keep the overall Thai economy on the path to much hoped for yet still precarious economic recovery.

The Rao Chana program and this recent expansion is just the latest in the Thai Government’s efforts to pump liquidity into the economy and is expected to inject around THB 380 million in total by the end of June. According to an article in the Bangkok Post on 27 April 2021,[1] if the third wave of COVID-19 and high rates of infection persist, additional borrowings may be unavoidable. The government is believed to be considering raising the ceiling of its fiscal sustainability framework, which caps public debt at 60% of the GDP. At the end of the 2021 fiscal year (30 September) Thailand’s public debt-to-GDP ratio could stand at 58.75%. To put that into perspective, the public debt level was around 40% of GDP before the pandemic emerged in early 2020. This all follows in the wake of last year’s record THB 1.9 trillion stimulus package to shore up the banking sector, provide soft loans to small businesses and establish a government-backed fund to protect holders of distressed or non-performing assets. Rao Chana will help those Thais most in need during this third wave and sustain momentum throughout the Thai economy during this time of uncertainty, closures and mounting travel restrictions across various provinces.

Gradually as rates of vaccination accelerate, cases of infection stabilize and transmission of the disease begins to fall, it is hoped that people can slowly start returning to everyday life, businesses can re-open and that productive economic activity can resume in earnest at some stage in late 2021 onward.

[1] https://www.bangkokpost.com/business/2106075/state-preps-b300bn-for-new-measures

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

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Guillaume Massin Partner, Cambodia/Thailand Managing Director & Head of Regional Real Estate Practice [email protected]

Nipaporn Supha-Utchaichan Partner & Thailand Deputy Managing Director [email protected]

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