Explainer: What the BOT board chairperson cannot do under the law
Nomination of Kittiratt raises questions on political involvement in appointment
All eyes are on the upcoming appointment of the next chairperson of the board of the Bank of Thailand (BOT) next Monday (November 4) to replace current chief Poramethi Vimolsiri, whose term expired at the end of September.
Doubts have emerged after the Finance Ministry nominated Kittiratt Na-Ranong as candidate for the position. Analysts said he might be unsuitable due to his involvement as a member and executive committee of a political party, as well as his role as an adviser to former prime minister Srettha Thavisin.
Although not currently holding a political position, Kittiratt was criticised for his close relationship with the Pheu Thai-led government.
Analysts fear that his appointment as BOT board chairman could result in government interference in the central bank, potentially eroding investor confidence in the bank’s independence from political influence.
The Pheu Thai government has had disagreements on monetary policy with the BOT, especially the policy rate, and has repeatedly urged the central bank to bring the interest rate down to boost the economy.
The Nation looks into the Bank of Thailand Act of 2008 on the curbs on the power of the BOT board chairman. Here are the findings:
1. The BOT board chairman cannot dismiss the BOT governor. According to the law, the BOT governor may leave the post on completing the five-year term, resign, or lack the qualifications specified by the law.
The law, however, allows the dismissal of the BOT governor by a Cabinet resolution, in case of severe ethical or disciplinary offences or incompetence.
2. The BOT board chairman cannot appoint the BOT governor. The central bank governor must be selected by a Selection Committee, comprising seven qualified members appointed by the finance minister.
3. The BOT board chairman cannot allot foreign exchange reserves as government spending. Many feared that the new chairman could use the country’s reserves to fund government projects, but this is barred by the law. This also applies to reserves in the form of gold, foreign currency and foreign bonds.
4. The BOT board chairman cannot interfere in the BOT’s monetary policies, including setting the interest rate. This role is strictly reserved for the Monetary Policy Committee, which comprises seven persons including the BOT governor, two deputies, and four independent members.
It is clear that the BOT board chairperson does not have unlimited power in the central bank, but it remains to be seen if the selection of the new chief would go smoothly on Monday, amid doubts and disagreements among various parties.
