Thailand Picks Capital Markets Veteran as Finance Chief

April 28, 2024

2 minutes read

(Bloomberg) — Prime Minister Srettha Thavisin named capital markets veteran Pichai Chunhavajira as Thailand’s new finance minister in an appointment that may ease tensions between the premier and the central bank over monetary policy.

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Pichai was also named deputy prime minister with immediate effect in a cabinet reshuffle announcement published on the Royal Gazette’s website on Sunday. He takes over the finance minister position from Srettha, who held dual roles since being sworn in as head of an 11-party coalition in September.

Pichai’s immediate challenge is to dial down tensions with the Bank of Thailand. Srettha had clashed with the central bank over its reluctance to cut the policy rate to spur growth and ease the burden on borrowers. Pichai will also need to overcome opposition to the government’s plan to hand out 10,000 baht ($270) to 50 million Thais later this year to stimulate the economy.

Thailand’s economy is set to expand 2.7% this year, according to the International Monetary Fund, lagging behind its neighbors.

The sluggish outlook and disagreements among policymakers have rattled foreign investors, prompting them to dump more than $3 billion of Thai bonds and stocks so far this year. The baht has gone from being the best performer in Asia in the final quarter of 2023 to among the worst this year with a 7.6% decline against the dollar.

In another sign of tensions within the government, Foreign Minister Parnpree Bahiddha-Nukara submitted his resignation after losing his deputy prime minister role in the reshuffle, the Krungthep Turakij newspaper reported.

Srettha, a political neophyte, has traveled the world to attract foreign direct investment, eased rules to boost tourism and unveiled measures to ease the debt burden on farmers and students to end a decade of sub-5% growth. But he’s been frustrated by the BOT’s refusal to lower rates and its opposition to cash handouts which was a key election pledge of his Pheu Thai party.

The central bank held its benchmark rate steady at a third straight meeting on April 10, ignoring calls by Srettha to slash borrowing costs by 25 basis points from a decade high 2.5%. The BOT has argued that some of the problems holding back growth are structural and can’t be addressed by monetary policy, while dismissing months of negative inflation prints as a fallout of state subsidies.

This is the first cabinet revamp by Srettha, less than a year into his tenure after he was appointed following a monthslong post-election impasse. Pichai was previously an adviser to Srettha as well as chairman of the Stock Exchange of Thailand.

Other changes include Finance Ministry Secretary Paopoom Rojanasakul’s promotion to deputy finance minister. Tourism Minister Sudawan Wangsuphakijkosol and Culture Minister Sermsak Pongpanit swapped roles, while Somsak Thepsuthin replaced Cholnan Srikaew as health minister.

(Updates with report of foreign minister’s resignation in sixth paragraph.)