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WEALTH FUND

BOT chairman has his own version

MR Chatu Mongol Sonakul, chairman of Bank of Thailand, said today that he welcomed the proposal to establish the sovereign wealth fund, but this must be carried out in a thorough manner.

At a seminar hosted by Fiscal Policy Office, he said that there was a discussion on this idea during the previous government. Then, he proposed that some US$10 billion from foreign reserves are channelled to the fund, so that it could be invested in equities. At present, the reserves can be invested only in low-risk bets like high-rated government bonds and gold. Then, he suggested that the committee to manage sovereign wealth fund consisted of members from the central bank with two representing the Finance Ministry. "It was true as Finance Minister Thirachai Phuvanatnaranubala said, the money belongs to the nation, not the central bank," he told reporters, insisting that he is not totally against the idea. Thirachai was adamant that the reserves must be put into better use. On fears that the fund would encounter a loss, he said the central bank also witnessed a loss on its bond investment. Last week, he ordered BOT Governor Prasarn Trairatvorakul to present him the studies on four issues including the sovereign wealth fund establishment and solutions to the Financial Institutions Development Fund (FIDF)'s debts. On the debt issue, Chatu Mongol said that he did propose the previous government to make use of monetary reserves worth Bt1 trillion. The reserves could be deposited at banks, and at the interest rate of 3 per cent, they could generate annual return of Bt30 billion - sufficient to reduce the FIDF debt burden. He was surprised that the Finance Ministry did not make a move on none of the proposals. He noted that though legal amendments are required, he said that such is well within the power of the finance minister.


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