Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong insists the Bank of Thailand's governor remains secure in his position despite the recent series of quarrels over monetary policy.
Kittiratt: Never crossed my mind
He denied speculation that he plans to remove Prasarn Trairatvorakul as chief of the central bank after his suggestions regarding the direction of the policy interest rate, control measures for foreign capital inflow and currency intervention have gone largely unnoticed.
"Even though as finance minister I oversee the central bank and can seek approval from the cabinet to remove him from office, I have never thought about that," said Mr Kittiratt.
Under the Bank of Thailand Act, the central bank governor can be dismissed if the bank's board submits a proposal to the Finance Ministry seeking cabinet approval for the dismissal.
The board chairman is Virabongsa Ramangkura, who is known as one of the government's key economic policymakers.
The latest dispute stems from Mr Kittiratt's letter of Jan 31 to the central bank's board of governors warning them that the responsibility for failure to act on cutting the policy rate after he suggested they do so would fall on them. He wants the Monetary Policy Committee (MPC) to cut the rate to tame capital inflows. The MPC will decide at its next meeting on Feb 20.
Previously, Mr Kittiratt and Mr Virabongsa agreed the MPC should cut the rate from 2.75% to somewhere between 0.75% and 1% to slow down fund inflows.
Asked whether it was reasonable to proceed with a dismissal order, Mr Kittiratt said a finance minister can be dismissed too if there is proven mismanagement.
He said related state agencies should work together to curb the pace of baht appreciation to make measures more efficient.
The stronger baht has hurt the export sector, as it performed poorly the last two months.
Mr Kittiratt said the currency's escalating rate is not good for the central bank's baht stabilisation costs, with its accounting losses most concerning.
"The Bank of Thailand's losses this year will likely rise to 100 billion baht, up from 70 billion last year, solely from baht stabilisation costs, as it must make up the gap between the interest rates of its bond issues to absorb liquidity from the system. This has not been included in the potential losses from normal operations of the bank," said Mr Kittiratt, adding that the governor needs to take urgent action to stop the damage.
"I don't mean to challenge anyone in public, but I have tried diplomatically to caution the central bank many times, and they still ignore me. As finance minister, I shoulder a heavy responsibility including the central bank, and I need to take action to ensure problems will be addressed," said Mr Kittiratt.