TDRI warns Thai govt of serious consequences from confronting BOT
A confrontation between the government and the Bank of Thailand (BOT) would negatively impact the economy and confidence in the prime minister, the head of the Thailand Development Research Institute (TDRI) warned on Wednesday.
TDRI is a non-profit, non-government Thai policy think tank focused on social and economic development issues.
Speaking at the Prachachat Business Forum in Bangkok, TDRI president Somkiat Tangkitvanich cited as an example the economic problems Türkiye is facing when the government and central bank clashed.
He said the Turkish government fired three central bank commissioners to force a decrease in policy rate, and as a result the country’s inflation has skyrocketed to over 80%, severely damaging the economy.
Meanwhile, former UK prime minister Liz Truss had to step down in less than two months after implementing several economic policies defying the advice of the Bank of England, he added.
Somkiat also criticised the proposed digital wallet policy of the Srettha Thavisin government. The ruling Pheu Thai Party had promised during its election campaign to hand out 10,000 baht in digital money to eligible Thais to stimulate the economy.
“The government has not learned anything from the past. This is not the first money handout scheme in Thailand or in the world,” he said, citing similar schemes during the Kukrit Pramoj, Thaksin Shinawatra, and Prayut Chan-o-cha administrations.
The TDRI president pointed out that money handout schemes in the past were able to lift the economy by a multiplying factor of 0.4% to 0.5%, and did not create “an economic tornado” as promised by the Srettha government.
“A money handout scheme must be planned out carefully and must be in line with the country’s fiscal discipline,” he said. “We have seen examples from around the world where ignoring this fact has resulted in a spike in public debt and plummeting credit rating for both the public and private sectors.”
In a related development, the chairman of the Stock Exchange of Thailand, Pichai Chunhavajira, is rumoured to take over as the next finance minister after he offloaded his large stake in BCPG Plc on Monday.
It has been widely speculated that Prime Minister Srettha may hand the finance portfolio that he currently holds to someone he trusts in a bid to end his confrontations with the BOT.
Srettha appears to have been locking horns with BOT Governor Sethaput Suthiwartnarueput over key economic policies. The biggest point of contention is Sethaput’s refusal to lower the policy interest rate, which Srettha believes is necessary to revive the economy.
Political observers also expect Srettha to reshuffle the Cabinet once the current parliamentary session ends on April 9 and hand the finance portfolio to Pichai.
