Former central bankers push for ‘non-political’ chairman

200 academics and economists sign open letter supporting Bank of Thailand independence

Former Bank of Thailand governors have joined about 200 economists and academics in calling for the appointment of a non-political chairperson for the bank’s board, amid signs that the central bank is coming under more political pressure.

The Pheu Thai-led government is reportedly proposing Kittiratt Na-Ranong, who served as a deputy prime minister in charge of economic affairs in the Yingluck Shinawatra administration, for the position.

A new chairman to succeed Porametee Vimolsiri is expected to be named on Monday after a three-month selection process, a Ministry of Finance source said on Wednesday.

The selection committee is led by Sathit Limpongpan, a former permanent secretary to the ministry.

If nominees with close political ties are picked to become Bank of Thailand board members, they could use their authority to serve the short-term interests of the parties they are affiliated with, according to an open letter issued by a group calling itself Economists for Society.

Former central bank governors Veerathai Santiprabhob, Prasarn Trairatvorakul, Tarisa Watanagase and MR Pridiyathorn Devakula are part of the group.

“If the chairman or board members use their power to serve the short-term interests of the political parties, it will have a negative impact on economic stability and may cause irreparable damage,” the group wrote. 

Mr Kittiratt, who also headed the Stock Exchange of Thailand for five years, been a critic of BoT policies. He served as chief adviser to former prime minister Srettha Thavisin, who complained repeatedly that high interest rates were keeping the economy from growing.

Tension between the government and the central bank has existed for months as they differed on the best way to revive an economy that has lagged the pace of expansion of its neighbours for a decade.

While the administration of Prime Minister Paetongtarn Shinawatra wants deeper interest rate cuts to shore up growth, the central bank led by governor Sethaput Suthiwartnarueput has advocated a more cautious approach. 

Still, a surprise rate cut earlier this month and an agreement between the BoT and the finance ministry to retain the inflation target at 1-3% for next year have helped cool the tension.

Finance Minister Pichai Chunhavajira has signalled that he will continue to push the central bank to do more to bolster growth.  

The central bank has proposed Kulit Sombatsiri, a retired permanent secretary of the energy ministry, and academic Surapon Nitikraipot, as its nominees for the board chair’s position, according to local media reports.

While the BoT chairman doesn’t have powers to dictate monetary policy, the official can evaluate the governor’s performance. The chairman also has a say in which outside experts join the seven-member Monetary Policy Committee, which sets rates and is headed by the governor.

If the government succeeds in installing its nominee as chairman and influences BoT policies, political parties might attempt to push for a candidate of their choice as governor when Mr Sethaput completes his term next year, the economists warned.

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