Former finance minister Korn Chatikavanij yesterday disputed ex-premier Thaksin Shinawatra's claim that an independent central bank was Thailand's problem in the face of a strengthening baht.
Korn said he suspected that Thaksin was actually dissatisfied that the law prevents the government from dismissing the Bank of Thailand (BOT) governor without sufficient reasons.
“What upsets Thaksin most is that the Bank of Thailand governor cannot be removed as easily as other bureaucrats,” he said in a Facebook message.
BOT governor Prasarn Trairatvorakul has resisted pressure from the government, and particularly from Finance Minister Kittiratt Na-Ranong, to have the policy interest rate reduced in order to weaken the strong baht – a measure expected to curb the currency’s appreciation, which is hurting the country’s exports.
Thaksin said in a Facebook message on Friday that Japan was able to achieve gross domestic product (GDP) growth of 3.5 per cent in the first quarter because the Bank of Japan works directly with the Japanese government. He said Thailand’s problem was that the Bank of Thailand was independent, and he accused the central bank of refusing to listen to the government.
Korn said yesterday that although the Bank of Japan has less independence than the European central banks, it is in fact “not working directly under the Japanese government”.
He also said that Thailand and Japan have different economic situations – for example the Japanese have massive savings - so different measures should be taken for the two countries. He did not think a similar interest rate cut to the one adopted in Japan would work for the Thai economy.
“Thaksin’s problem is that he does not have a sufficient understanding of economics. It is untrue that the Thai gross domestic product depends mostly on exports. In fact, about 52 per cent of the GDP comes from domestic consumption,” said Korn, who is a deputy leader of the opposition Democrat Party.
Meanwhile, Thaksin’s legal adviser and spokesman Noppadon Pattama said yesterday that the ex-leader made his comments honestly, with no intention of attempting to interfere with the central bank.