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ANALYSIS

Virabongsa gets nod to chair BOT

Vatchara Charoonsantikul

Achara Deboonme

The Nation

Virabongsa

BANGKOK: -- Veteran economist Virabongsa Ramangkura has been nominated as the new chairman for the Bank of Thailand - as expected - amid suspicion that the government intervened the selection process at the country's top economic body to unify its political power.

To succeed MR Chatu Mongol Sonakul, Virabongsa will be given seven days to resign from all posts held in private companies. The selection panel convened yesterday to discuss the qualifications of three candidates: the government's candidate - Virabongsa; and the central bank's two candidates - Chatu Mongol and Chulalongkorn University's former rector Thienchai Kiranan.

According to a source, who asked not to be named, the discussion took nearly three hours and the seven members cast votes in a secret ballot. Virabongsa won the highest number of votes.

His nomination will now be submitted to Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong, who will forward the nomination to Cabinet. If approved this month, Virabongsa would serve for one year and three months, before he turns 70.

Despite a denial by Kittiratt, it appears there was intervention in the selection process by the government from the very beginning. Right after he took over the Finance post, Kittiratt appointed six new members to the selection panel, months ahead of the end of Chatu Mongol's term at the end of April. Of seven members, Panus Simasathien, former chairman of the National Economic and Social Development Board, was the only man who served for two terms.

The six "new" members were former Finance permanent secretary Suparat Kawatkul, former director-general of the Revenue Department Sirote Sawasdipanich, ex-senator and former Budget Bureau chief Sawatdiparp Kantatham, former vice minister for the PM's Office Pornchai Nuchsuwan, former Industry permanent secretary Pricha Attavipach, and ex-MP Vuthipan Vichairat. As expected, Virabongsa won six votes from the seven-member selection committee.

The intervention has led to widespread fears that through Virabongsa, the government is seeking a way to get its hands on the country's foreign reserves and monetary policies. With a plan to invest as much as US$75 billion, or nearly Bt2.3 trillion, over the next five years, it remains unclear what the government will do. While the minimum daily wage is raised mainly to address income inequality, the government is cutting corporate tax rates amid a number of stimulus measures which could lower future revenue and dent investment budgets.

The absence of a financing master plan has cast more doubts over the aggressive investment plan and the Finance Ministry's aim to balance the budget in 2016. With funding from the central bank, the government can fulfil its promises and nurture political popularity.

Both Kittiratt and Virabongsa are in favour of financing mega projects through a special scheme, like a sovereign wealth fund. Under this, the government could issue bonds to finance mega projects. Bonds would be sold to the Bank of Thailand, with or without interest. This in turn would prompt "money printing" and could spark inflationary pressure and rock economic stability - both in the long term.

The Bank of Thailand's foreign reserves, which stood at $178.4 billion or Bt5.52 trillion as of May 4, are attractive for use in financing mega project investment. The government would need a more sound financing plan, rather than tapping the reserves or twisting monetary policies for its benefit.

Violating monetary discipline, the BOT could cause panic in the market. If reserves are actually tapped, the baht could weaken further from 31.35-36 per US dollar right now. Worse, a risky approach could derail long-term economic development.

Importantly, the government must ensure the central bank's integrity as the country's top economic pillar.

With this appointment, some hope that Virabongsa may influence in-depth discussion over balanced economic policies, which could steer the economy away from the crises the euro zone and Latin America have witnessed.

-- The Nation 2012-05-15

[farang000999]

bearish for thb and thai economy imho.

[chiang mai]

This is not good (for Thailand)

[Lite Beer]

Virabongsa voted to be BoT chairman

BANGKOK, 15 May 2012 (NNT) – Former Finance Minister and Deputy Prime Minister Virabongsa Ramangkura has been selected as the next Bank of Thailand (BoT) Chairman.

The selection panel has voted 6-1 for Mr Virabongsa to be the central bank chair, replacing MR Chatumongol Sonakul, whose term has expired since April.

Three candidates nominated on Tuesday for the BOT's top post included Mr Virabongsa, MR Chatumongol, and Tienchai Keeranand, Chulalongkorn University's former rector.

After the voting, Mr Virabongsa must resign within one week from all posts held in private companies with interests in the Bank of Thailand . The panel will then submit the voting result to Finance Minister Kittiratt Na-Ranong, who will forward the finding to the Cabinet for consideration.

-- NNT 2012-05-15

[Orac]

Though I can understand the concerns here, it just goes to show the state of democracy in Thailand.

The intervention has led to widespread fears that through Virabongsa, the government is seeking a way to get its hands on the country's foreign reserves and monetary policies.

It is interesting that it is viewed as a bad thing that a government has control over monetary policy and also begs the question that, if the government is not setting monetary policy, then who is.

[MaiChai]

How to build a dynasty: put all your cronies in positions of power so you can pull their strings?

[chiang mai]

BOT is meant to be independant of government, just like other central banks.

[Orac]

BOT is meant to be independant of government, just like other central banks.

But all central banks follow some sort of direction from the relevant government to some degree or other so the term 'independent' is not strictly accurate.

[chiang mai]

BOT is meant to be independant of government, just like other central banks.

But all central banks follow some sort of direction from the relevant government to some degree or other so the term 'independent' is not strictly accurate.

BOT is meant to be independant of government, just like other central banks.

But all central banks follow some sort of direction from the relevant government to some degree or other so the term 'independent' is not strictly accurate.

Indeed, but not to the extent of giving up with the country's foriegn assetts which is what the current government appears to want. Remember Tarisa, she fought valiantly to maintain that independace and even won the praise of the countries highest authorities for doing so, despite much government pressure to do otherwise.