The government's attempts to influence the appointment of a new central bank chairman could lead to "disastrous consequences" for Southeast Asia's second-largest economy, according to a former Bank of Thailand (BoT) governor.
Tarisa Watanagase, the country's first female central bank governor, said the push to appoint a government nominee as the BoT chairman will affect the independence of the monetary authority.
Her comments come as local media reported that a panel of retired bureaucrats and regulators will meet on Tuesday to select the chairman and two board members from a roster put forward by the Finance Ministry and the central bank. Both have been at loggerheads over monetary and fiscal policies for almost a year.
"In the past, the selection committees for important positions of the Bank of Thailand have performed their duties independently and have not accepted interference," Ms Tarisa wrote in an open letter published Monday. "No one wants to be recorded in history as people responsible for bringing the Thai economy to the first step of disaster."
The selection panel should ensure the BoT new chairman and board members can "perform their duties appropriately" and are acceptable to society, said Ms Tarisa who was appointed governor by an interim government following the 2006 military coup.
Prime Minister Paetongtarn Shinawatra's administration is backing Kittiratt Na-Ranong, a critic of the central bank's hawkish monetary policy and a loyalist of the ruling party, for the chairman's job. BoT has not disclosed its nominees for the post.
While the BoT chairman does not have powers to dictate monetary policy, the official can evaluate the central bank governor's performance. The chairman also has a say in which outside experts join the seven-member rate panel headed by Governor Sethaput Suthiwartnarueput, who is due to retire in September next year.
Mr Sethaput, who was appointed by a military-backed government in 2020, has ignored calls for a rate cut from the Pheu Thai-led coalition government for almost a year. While former prime minister Srettha Thavisin openly called for easing borrowing costs, Paetongtarn has left it to her cabinet colleagues to keep up the pressure on the BoT.
The Finance Ministry is pushing for a higher inflation target for next year to create room for BoT to cut interest rate from a decade-high 2.5%. Mr Sethaput has argued that the current settings are neutral for Thailand’s economic and financial conditions and called for central bank decisions to be free from interference.
Ms Tarisa said government interference can damage the Thai economy by focusing on policies stimulating the economy in the short term. A decision to handout 10,000 baht each to most adults is already set to create a huge financial burden which can lead to credit rating downgrades, she said.