Former prime minister Thaksin Shinawatra warned yesterday that a lack of cooperation between the central bank and the Finance Ministry in reining in the strengthening baht could lead to a new financial crisis for Thailand.
Thaksin said the current economic indexes were worrying. “I like looking at different indexes and often get alarmed,” he said.
“During the crisis, only the paranoid survived,” he added, quoting Andrew Grove, former chief executive of computer-chip maker Intel.
The latest message on his Facebook account (www.facebook.com/thaksinofficial) posted yesterday afternoon said that Japan was able to achieve a 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.
“They [the Japanese] have a holistic approach to dealing with their economic problems. Their monetary policy and their fiscal policy are united,” Thaksin said.
He also noted that the Japanese government made the yen 20-per-cent weaker and printed more banknotes under a quantitative easing policy aimed at revitalising the economy.
Thaksin, who is believed to be pulling the strings behind the ruling Pheu Thai Party, said a law issued after the 2006 coup made the Thai central bank independent from the government. “They do not listen to the government. This is worrying because both sides use their own policies and believe in their own,” he said.
The ex-leader went on to say that a capital influx into Thailand was worrying and could lead to a bubble in asset pricing.
“Will there be any joint measures between the Finance Ministry and the Bank of Thailand? I am worried. We may not have to worry, if we look at the future in the short term. But if we look at the next few years, there is cause for alarm,” he said.
Thaksin said that as Thailand’s GDP relies heavily on exports, an increase in baht’s value of an additional Bt1 per US dollar would result in a loss of 0.7 per cent in GDP.
He said that when serving as foreign minister between 1994 and 1995, he had cautioned the central bank and the Finance Ministry “every time” he attended meetings of the bank’s Exchange Equalisation Fund, but his warnings were not heeded and the financial crisis of 1997 ensued.