(Bloomberg) -- A group of former Thai central bank chiefs is calling for the appointment of a non-political person to chair the bank amid reports that the government is pushing the candidature of a former finance minister to tighten its grip over the monetary authority.
If nominees with close political ties are picked to become Bank of Thailand’s board and as members, they could use their authority to serve the short-term interests of the parties they are affiliated with, according to Economists for Society which includes ex-governors Veerathai Santiprabhob, Prasarn Trairatvorakul, Tarisa Watanagase, Pridiyathorn Devakula and about 200 economists and academics.
“If the chairman or board members use their power to serve the short-term interests of the political parties, it will have a negative impact on economic stability and may cause irreparable damage,” the group wrote in an open letter on Wednesday.
The appeal for a neutral chair comes as a panel is scheduled to meet on Monday to pick the head and two board members from a roster put forward by the Finance Ministry and the central bank. Kittiratt Na-Ranong, a critic of BOT’s policies and a loyalist of the ruling party, is seen as the frontrunner for the chairman’s job.
Tensions between the government and the central bank have simmered for months as they differed on the best way to revive Southeast Asia’s second-largest economy that’s lagged the pace of expansion of its neighbors in the past decade. While Prime Minister Paetongtarn Shinawatra administration wants deeper interest rate cuts to shore up growth, the conservative central bank led by its Governor Sethaput Suthiwartnarueput has advocated a cautious approach.
Still, a surprise rate cut earlier this month and an agreement between BOT and the Finance Ministry to retain inflation target at 1% to 3% for next year have helped cool the tension. Finance Minister Pichai Chunhavajira has signaled he will continue to push the central bank to do more to bolster growth.
BOT has proposed Kulit Sombatsiri, retired permanent secretary of the energy ministry, and also academic Surapon Nitikraipot, as its nominees for the board chair’s position, according to local media reports.
While the BOT chairman doesn’t 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 the governor.
If the government succeeds in installing its nominee as BOT chair and influence its policies, political parties might attempt to push for a candidate of its choice as governor when Sethaput completes his term next year, according to the group.
The selection panel must “perform its duties with honesty, fairness, transparency and good governance, without succumbing to political pressure to preserve an important institution like the Bank of Thailand,” the group said.
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