THE Thai government’s campaign to pressure the Bank of Thailand (BOT) to cut interest rates suffered a significant setback, with the Office of the Council of State effectively ruling that the official nominee to be chairman, former finance minister Kittiratt Na-Ranong, is not suitable.
Without directly naming Kittiratt, Secretary-General Pakorn Nilprapunt said that “Mr K’s” role as an adviser to the prime minister means he is a “person holding a political position” who was appointed for political reasons, and who is involved with government administration. He is therefore not qualified to be chairman, Pakorn said.
While the chair of the BOT is not involved in monetary policy meetings, they can evaluate the governor’s performance and also have a say in which outside experts join the seven-member rate panel. The council’s legal opinion means that if the government tries to push ahead with Kittiratt’s appointment, it could face political risks and challenges.
The government has not immediately commented on Friday’s (Dec 27) announcement, which comes just three days after the Thai Post, citing the finance permanent secretary, reported that the council had decided Kittiratt was unqualified.
Within hours of that report, the Office of the Council of State’s Pakorn declared it had not yet concluded its legal opinion.
The Thai government has been looking for ways to increase its influence over the central bank, and Bloomberg News reported in June that it was considering using the chairman’s role as a means of gaining leverage.
The BOT has cut its benchmark rate by a quarter point this year, to 2.25 per cent, but at its most recent meeting held borrowing costs unchanged.
The government wants lower borrowing costs to reduce the burden of household debt, but BOT policymakers say rates are appropriate and other measures are needed to boost growth. BLOOMBERG
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