THAILAND’S government expects a selection panel to quickly conclude the process to pick a new chairman for the nation’s central bank after its previous nominee was deemed unsuitable for the job due to his ties with the ruling party.
The seven-member panel of former civil servants and regulators will need to decide on the best strategy under the rules, Finance Minister Pichai Chunhavajira told reporters on Thursday (Jan 2), days after the Office of the Council of State said former finance minister Kittiratt Na-Ranong was not suitable because of his previous role as an adviser to the prime minister. The ministry is talking to the panel about the way forward, Pichai said.
“It should be quicker than before as we don’t have to start from scratch,” Pichai said without elaborating.
Pichai’s comments are the first official reaction from the government, signalling it will not press ahead with Kittiratt’s candidacy as it risks future legal challenges. Prime Minister Paetongtarn Shinawatra’s administration and the Bank of Thailand (BOT) have been at loggerheads over a range of issues including monetary policy and inflation targets, with Pichai pushing for interest rate cuts to bolster a tepid economic recovery.
The selection panel can either pick one of the two remaining candidates – Kulit Sombatsiri, who has previously worked at the energy and finance ministries, and academic Surapon Nitikraipot – or restart the process. The delay in appointing a new chair has allowed Porametee Vimolsiri, who completed his term in September, to hold temporary charge.
The government has been exploring ways to exert greater influence on the BOT, including by appointing its nominee as chair. Though the BOT chair is not involved in monetary policy meetings, the official can evaluate the governor’s performance and also have a say in which outside experts join the seven-member rate panel.
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The candidacy of Kittiratt, a former strategist of Pheu Thai Party that heads the ruling coalition, had also faced opposition from former central bank chiefs and economists. Former BOT governors Veerathai Santiprabhob and Tarisa Watanagase were among those who opposed Kittiratt’s pick, arguing the appointment of someone with political links would cause irreparable damage to the institution’s credibility as they would serve the short-term interest of the parties they’re aligned with.
BOT’s rate panel headed by governor Sethaput Suthiwartnaruep last month ignored government calls to lower borrowing costs and instead held the benchmark rate steady at 2.25 per cent after a quarter-point reduction in October. “Preserving monetary policy space had become increasingly necessary amid heightened uncertainties,” the BOT said.
On Thursday, Pichai said if economic recovery is weak, then the policy rate should be cut. The central bank, in the edited minutes of its December rate meeting released on Thursday, said the monetary policy committee deemed it appropriate to maintain a “broadly neutral stance” as inflation moves towards the target range.
The BOT last month said that it expects economic growth to gain further momentum to 2.9 per cent this year from an estimated 2.7 per cent expansion in 2024. Gross domestic product data is due for release in the middle of February. BLOOMBERG
