Newly appointed Finance Minister says he plans talks with Bank of Thailand governor Sethaput Suthiwartnarueput in a bid to ensure fiscal and monetary policies are aligned.
Describing disagreements between the government and the central bank as normal, Mr Pichai said it was his responsibility to ensure coordination between the two key engines of economic policy.
“It’s our duty and responsibility for me and the BoT to work together to push both engines — monetary and fiscal policies — in the same direction,” he told reporters on Tuesday.
“To ensure a coordinated approach, the government and the BoT must reach a common understanding about the issues facing the country,” he said, expressing confidence that his planned discussions will be positive.
His comments come as tensions between the government and the central bank flared again after Pheu Thai Party Leader Paetongtarn Shinawatra said on Friday that central bank autonomy posed an “obstacle” to reviving the sluggish economy.
She complained that higher public debt was the result of an overuse of fiscal policy to prop up the economy, and that monetary policy was not being adjusted appropriately.
Prime Minister Srettha Thavisin, who has complained several times that the central bank’s policy interest rate of 2.5% is too high, on Tuesday welcomed the finance minister’s plan to talk with the central bank governor, saying it would help ease tensions.
Ms Paetongtarn’s comments prompted some speculation that the ruling party might use its majority in parliament to push for an amendment to the Bank of Thailand Act to curb the central bank’s independence.
Deputy Finance Minister Paopoom Rojanasakul insisted that the government has no plan to revise the Bank of Thailand Act.
Mr Pichai also said differences of opinion over the Act could be resolved through discussions.
While affirming the central bank’s independence, he said its policies should also support the government’s policies.
However, former Democrat MP Sathit Wongnongtoey yesterday warned of possible attempts to amend the law to curb the BoT’s independence.
Mr Sathit noted that when Ms Paetongtarn’s father Thaksin was prime minister, his government removed MR Chatu Mongol Sanakul as the BoT governor in 2001 under the old law.
The government of Yingluck Shinawatra also tried to remove the central bank governor but was unable to do so, thanks to a new law that made doing so more difficult.
The BoT, which has kept borrowing costs at a decade high of 2.5%, said last month that the decision has given it more options to deal with currency volatility, geopolitical risks and uncertainties from the United States Federal Reserve.
The central bank expects economic growth to improve to 2.6% this year from 1.9% in 2023, though much could depend on whether the government’s 500-billion-baht digital wallet stimulus goes ahead in the fourth quarter and whether it works as intended.
The BoT has argued that some of the problems holding back growth are structural and cannot be addressed by monetary policy, while dismissing months of negative inflation as the result of state subsidies.
A longtime confidant of Thaksin, Mr Pichai chaired the energy company Bangchak Corp since 2012 before resigning to take the finance post. He also was on the central bank board from 2014 to 2017.