The Thai government’s attempt to influence the Bank of Thailand (BOT) through the appointment of a politically connected chairman has been thwarted. The Office of the Council of State, Thailand’s legal advisory body, declared the government’s nominee, former finance minister Kittiratt Na-Ranong, unsuitable for the position.
The Council of State’s secretary-general, Pakorn Nilprapunt, issued a statement clarifying that “Mr. K,” an advisor to the prime minister, holds a political position and was nominated for political reasons, disqualifying him from the chairmanship. While the chairman doesn’t directly participate in monetary policy decisions, the role holds significant influence, including evaluating the governor’s performance and contributing to the selection of external experts for the rate-setting committee. This ruling presents a considerable obstacle to the government’s efforts to exert greater control over the central bank. Forcing the appointment despite the legal opinion risks political backlash and potential legal challenges. The selection process may need to be restarted entirely.
Kittiratt publicly stated on social media that he respects the Council of State’s decision. The statement from Pakorn did not address the central bank’s own nominees for the position: Kulit Sombatsiri, with prior experience in the energy and finance ministries, and academic Surapon Nitikraipot.
This announcement comes days after a premature report in the Thai Post, citing the finance permanent secretary, incorrectly claimed Kittiratt’s disqualification. The swift correction from the Council of State highlighted the sensitivity surrounding this appointment. The delay in naming a new chairman already signaled growing opposition to Kittiratt, a former member of the ruling Pheu Thai party. Concerns regarding the potential compromise of the BOT’s independence due to Kittiratt’s political affiliations were previously voiced by the Economists for Society group, comprised of former central bank governors.
The Thai government’s aspirations for greater influence over the BOT have been evident. Reports from June indicated the government considered leveraging the chairman position to gain leverage over monetary policy. This recent development underscores the tension between the government’s desire for lower interest rates to stimulate the economy and alleviate household debt, and the central bank’s commitment to maintaining its independence and setting rates based on economic conditions. The BOT has implemented a quarter-point rate cut this year, bringing the benchmark rate to 2.25%, but maintained the rate at its latest meeting. Policymakers at the BOT maintain that current rates are appropriate and advocate for alternative measures to foster economic growth. This situation highlights the ongoing debate regarding the balance between government economic objectives and the preservation of central bank independence in Thailand. The rejection of Kittiratt’s nomination reinforces the importance of maintaining the BOT’s autonomy in setting monetary policy.
