By Panarat Thepgumpanat and Kitiphong Thaichareon
BANGKOK (Reuters) -A Thai panel on Monday picked ruling party loyalist and former Finance Minister Kittiratt na Ranong to chair the central bank’s board, two government sources said, choosing the government’s candidate despite concerns over political interference.
Kittiratt’s selection comes in the face of opposition from hundreds of economists and some former central bank governors, who had raised fears the government could increase its influence over the monetary authority if its nomination was selected. Kittiratt has been a critic of the current governor.
The government sources who confirmed to Reuters the selection of 66-year-old former deputy premier Kittiratt spoke on condition of anonymity because they were not authorised to speak on the issue.
The head of the seven-member ad hoc panel – set up to decide on the job independently of the government and central bank – had earlier said a decision had been reached on the next Bank of Thailand board chair but did not name the candidate.
Kittiratt did not immediately respond to a request for comment. His selection still needs to be endorsed by the finance minister, cabinet and king but he is likely to be approved.
The government’s nomination of Kittiratt was first reported by Reuters and followed months of government pressure on the central bank to slash interest rates, which had been held steady at a decade-high for a year until a surprise cut last month.
Though the board chair cannot direct interest rates policy, the board selects the monetary policy committee, which is made up of the governor, two deputy governors and four outside experts.
The chair will also have some influence on the selection of the next Bank of Thailand chief when incumbent Sethaput Suthiwartnarueput completes his term in September 2025.
ROWS OVER RATES
As finance minister from 2012-2014, Kittiratt locked horns frequently with the then central bank chief over monetary policy and he had backed the current government’s repeated demands for a rate cut to revive an economy that grew just 1.9% last year.
Having long resisted the pressure, the central bank unexpectedly reduced its key rate by a quarter point to 2.25% on Oct. 16, the first cut since 2020. The next policy review is Dec. 18.
The government has been at odds with the central bank since returning to power in September 2023.
Kittiratt’s selection could widen the rift between the central bank and the government led by the Pheu Thai Party, whose leadership has often clashed with the monetary authority on interest rates
Central bank governor Chatu Mongol Sonakul was sacked in 2001 on the orders of then premier Thaksin Shinawatra, Pheu Thai’s influential founder and father of Paetongtarn Shinawatra, who recently became prime minister.
Paetongtarn said in May the central bank’s independence was “an obstacle”.
Last month, former Bank of Thailand governor Tarisa Watanagase warned that the institution’s independence could be at threat and that could “lead to a disaster for the economy”.
In an open letter at the weekend, a group of more than 800 economists that included four former central bank governors warned that political interference could damage long-term economic stability, adding that the ruling party might also push for its nominee as governor next year.
“If the board chairman or members use their power to serve the short-term interests of the political party, it will have a negative impact on economic stability and may cause irreparable or irreversible damage,” it said.
The government has yet to comment on the letter.
(Reporting by Andrew Heavens)
