Ex-Thai Central Bankers Pitch for Chair of Apolitical Council

(Bloomberg) — A group of former Thai central bank chiefs is calling for an apolitical person to chair the bank, amid reports that the government is eyeing a former finance minister to tighten its grip on the monetary authority.

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If appointees with close political ties are elected to the Bank of Thailand’s board and as members, they could use their authority to serve the short-term interests of the parties they are affiliated with, according to the Economists for Society, which includes former governors Veerathai Santiprabhob. , Prasarn Trairatvorakul, Tarisa Watanagase, Pridiyathorn Devakula and about 200 economists and academics.

“If the president or board members use their power to serve the short-term interests of political parties, it will negatively impact economic stability and may cause irreparable damage,” the group wrote in an open letter Wednesday.

The call for a neutral chair comes as a panel is scheduled to meet on Monday to choose the chief and two board members from a list submitted by the finance ministry and the central bank. Kittiratt Na-Ranong, a critic of BOT policies and a loyalist of the ruling party, is seen as the front-runner for the post of president.

Tensions between the government and the central bank have simmered for months as they have differed over how best to revive Southeast Asia’s second-largest economy, which has lagged the pace of expansion of its neighbors in the last decade. While Prime Minister Paetongtarn Shinawatra’s administration wants deeper interest rate cuts to support growth, the conservative central bank led by its governor Sethaput Suthiwartnarueput has advocated a cautious approach.

However, a surprise rate cut earlier this month and an agreement between the BOT and the Finance Ministry to maintain the inflation target at 1% to 3% for next year have helped to cool the tension. Finance Minister Pichai Chunhavajira has signaled he will continue to push the central bank to do more to support growth.

The BOT has proposed Kulit Sombatsiri, retired permanent secretary of the power ministry, and also academician Surapon Nitikraipot as nominees for the position of board chairman, according to local media reports.

While the chairman of the BOT has no powers to dictate monetary policy, the official can evaluate the performance of the central bank governor. The president also has a say in which outside experts join the seven-member panel led by the governor.

If the government succeeds in installing its candidate as BOT chairman and influencing its policies, political parties may try to push for a candidate of its choice as governor when Sethaput completes his term next year, according to the group.

The selection committee must “perform its duties with honesty, fairness, transparency and good governance without bowing to political pressure to preserve an important institution like the Bank of Thailand,” the group said.

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