1 week Ago
An independent selection committee, headed by Sathit Limpongpan, the former finance permanent secretary, picked the new chairman of the Bank of Thailand's (BoT) board at a meeting on Monday. However, none of the committee members, including Mr Sathit, were willing to face the media to announce their decision. A report leaked from the Finance Ministry confirmed earlier speculation that Kittiratt Na-Ranong was chosen as chairman.
Mr Sathit's and the other six selection committee members' reticence in announcing their decision might stem from their concern that they could face a backlash because their decision is highly controversial. There have been mixed reactions to Mr Kittiratt's selection amid concerns over the central bank's independence. The selection itself is supposed to be independent, but in this case, it appears to have ignored the warnings of good-intentioned scholars, including four former central bank governors, about the danger of political interference in the central bank's affairs.
For sure, Mr Kittiratt's previous background in the capital market, serving as the managing director of the Stock Exchange of Thailand and a director of the Securities and Exchange Commission, may make him the best choice among the three candidates. However, his appointment has met with distrust and serious concerns among many, including four former central bank governors, 800 academics, and central bank staff, due to his close connections with the Pheu Thai Party. Their concerns are valid and worth listening to.
Mr Kittiratt was a deputy prime minister and finance minister in Yingluck Shinawatra's previous administration and economic advisory chief of former prime minister Srettha Thavisin. One disturbing aspect concerning Mr Kittiratt during the Yingluck years was his hostile attitude towards Prasarn Trairatvorakul, the then-central bank governor. Back then, Mr Prasarn refused to yield to a government demand to cut the policy interest rate by 25 up to 50 basis points to weaken the strong baht and to transfer the 1.
4 trillion baht debt of the Financial Institutions Development Fund (FIDF) from the Finance Ministry to the central bank to ease public debt. In a well-documented episode, Mr Kittiratt said during a 2013 debate with another former finance minister that he thought daily about removing the central bank's governor. Fortunately, Mr Prasarn survived such political pressure.
He served his full term because no one could justify his dismissal at the time. By design or coincidence, the current governor, Sethaput Suthiwartnarueput, was in conflict with the Srettha Thavisin government last year when he refused to cut interest rates to ease financial costs on borrowings. Now, the fiscal policy committee just cut the policy rate last month from 2.
50% to 2.25%, the first time since 2020. The Pheu Thai government still wants further interest cuts.
As chairman of the BoT, Mr Kittiratt's duty is to ensure the central bank's independence from political interference, which impacts fiscal discipline, financial stability, and the state of the Thai economy. Every step he takes in his new role must be closely monitored to ensure that he will perform in the national interest instead of for political interests..
