The labour union of the Bank for Agriculture and Agricultural Cooperatives (BAAC) is seeking legal opinions about whether the government can borrow from the state-owned bank to support its costly digital wallet handout.
Opinions differ among the membership, union president Supachai Vongvekin said on Thursday. Some suggest the government can borrow from the bank, under an amendment to the BAAC Act of 1966.
The amendment, Section 9(3), says the BAAC operates as a financial institution for rural development, providing financial assistance or management to individuals, groups, entrepreneurs, village or community funds, or organisations established to support the livelihoods of farmers or communities to enhance productivity or products, investment, production, processing, marketing, or community economic development.
The handout of 10,000 baht to some 50 million Thais aged 16 and up is expected to cost 500 billion baht. Deputy Finance Minister Julapun Amornvivat has said the money would come from three sources: 153 billion baht from the fiscal 2025 budget; 175 billion from budget reallocation for the current fiscal year; and 172 billion via a loan from the BAAC.
The amount borrowed from the BAAC would be earmarked for farmers who register for the digital wallet, the government has said.
Whether the government can borrow money from the bank to provide to farmers and whether this is considered lending to farmers are the questions that need to be answered based on the interpretation of Section 9(3), said Mr Supachai.
In the past, governments have used Section 28 of the State Fiscal and Financial Discipline Act to order the BAAC to allocate money in advance to support state-sponsored projects, such as the rice-pledging scheme.
However, in those instances the bank transferred money directly to farmers’ accounts. In this case, it is uncertain which method the government will employ, Mr Supachai said.
“To ensure legal compliance, relevant agencies such as the Bank of Thailand, Ministry of Finance and the Council of State should help interpret whether the BAAC’s laws align with the government’s intended policies,” he said.
According to a source who requested anonymity, although the BAAC’s liquidity totals roughly 200 billion baht, exceeding the amount the government seeks to borrow for the digital wallet project, a portion of this amount must be kept as a reserve, in line with Bank of Thailand policy.
The proposal to borrow 172 billion baht from the BAAC requires prior approval from the cabinet, followed by a presentation to the BAAC board for further consideration, the source said.
- Commentary: Handout difficult without BoT help