Thailand's vaunted 500 billion baht ($13.78 billion) handout scheme will roll out in the fourth quarter and help the economy expand at least 5% in 2025, officials said on Wednesday, as the government banks on stimulus to jumpstart sluggish growth.

The signature populist policy of the ruling Pheu Thai Party is aimed at reviving an economy that grew just 1.9% last year, slower than 2022, and entails transferring 10,000 baht ($275) to 50 million Thais to spend in their localities within six months.

The so-called "digital wallet" will be financed by the 2024 and 2025 fiscal budget and will also use capital from a state-owned bank, Finance Ministry Permanent Secretary Lavaron Sangsnit told a press conference.

The scheme would boost economic growth by 1.2 to 1.6 percentage points, mostly felt next year, Deputy Finance Minister Julapun Amornvivat told the same briefing.

"The measure will help the economy grow close to its potential... it will grow at least 5% from 2025," he added.

Prime Minister Srettha Thavisin is betting on his flagship policy triggering a ripple effect in the economy, which he has said might have grown less than 1% in the first quarter of 2024, following the annual 1.7% expansion in the previous quarter.

"The policy will uplift the economy. The government has overcome many challenges and now is able deliver on its plan to turn around lives," Srettha, a real estate mogul who is also finance minister, told the briefing.

"The 10,000 baht digital wallet will create spending at the grassroots and uplift livelihoods and expand investment leading to new jobs. The government will receive benefits as tax."



The announcement comes after a series of delays and months of scrambling by the government to find ways to finance the programme without overly burdening public debt, while consulting with experts on whether it was constitutional.

It has faced criticism from some economists and former central bank governors, who have called the scheme fiscally irresponsible.

The current central bank chief has repeatedly said stimulus was not the solution to drive Southeast Asia's second-biggest economy and structural change was needed.

Srettha said the programme was all above board.

"Importantly, it is in line with all laws and within the framework of strict financial and fiscal discipline," he added.

Last week, the cabinet approved a plan to expand its budget deficit next year by 152.7 billion baht to stimulate the economy.

Thailand's economy unexpectedly shrank 0.6% in the final quarter of 2023 from the third quarter, prompting the state planning agency to cut its 2024 growth outlook to between 2.2% and 3.2%, from the 2.7% to 3.7% earlier projected.

Consumer confidence in March dropped for the first time in eight months over worries of economic performance.

The baht is presently one of the worst-performing emerging Asia currencies, having lost by 6% year-to-date.

($1 = 36.32 baht)

(Reporting by Chayut Setboonsarng, Orathai Sriring, Kitiphong Thaichareon; Satawasin Staporncharnchai and Panarat Thepgumpanat; Editing by Martin Petty)