(Bloomberg) – Prime Minister Srettha Thavisin Capital markets veteran Pichai Chunhavajira has been named Thailand’s new finance minister. The appointment could ease tensions between the prime minister and the central bank over monetary policy.
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In a cabinet reshuffle announcement published on the Royal Gazette website on Sunday, Pichai was also appointed deputy prime minister with immediate effect. He takes over as finance minister from Srettha, who has held dual roles since being sworn in as leader of an 11-party coalition in September.
Pichai’s immediate challenge is to ease tensions with the Bank of Thailand. Srettha had clashed with the central bank over its reluctance to cut interest rates to boost growth and ease the burden on borrowers. Pichai also must overcome opposition to the government’s plan to distribute 10,000 baht ($270) to 50 million Thais later this year to stimulate the economy.
Thailand’s economy is expected to grow 2.7% this year, underperforming its neighbors, according to the International Monetary Fund.
The bleak outlook and divisions among policymakers have spooked foreign investors, prompting them to dump more than $3 billion in 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 one of the worst performers this year, with a 7.6% decline against the dollar.
In another sign of tensions within the government, Foreign Minister Parnpree Bahiddha-Nukara tendered his resignation after losing his role as deputy prime minister in the reshuffle, the Krungthep Turakij newspaper reported.
Srettha, a political newcomer, has traveled the world to attract foreign direct investment, relaxed rules to boost tourism and unveiled measures to ease the debt burden of farmers and students, ending a decade of sub-5% growth to end. But he was frustrated by the BOT’s refusal to cut interest rates and its opposition to cash spending, which was a key campaign promise of his Pheu Thai party.
The central bank left its key interest rate unchanged at its third straight meeting on April 10, ignoring Srettha’s calls to cut borrowing costs by 25 basis points from a decade high of 2.5%. The BOT has argued that some of the problems holding back growth are structural and cannot be addressed through monetary policy, while dismissing months of negative inflation numbers as the result of government subsidies.
This is the first cabinet reshuffle by Srettha, less than a year after he was appointed following a months-long post-election impasse. Pichai was previously an advisor to Srettha as well as chairman of the Stock Exchange of Thailand.
Other changes include the promotion of Finance Ministry Secretary Paopoom Rojanasakul to Deputy Finance Minister. Tourism Minister Sudawan Wangsuphakijkosol and Culture Minister Sermsak Pongpanit swapped roles, while Somsak Thepsuthin Cholnan replaced Srikaew as health minister.
(Updates with report of Secretary of State’s resignation in sixth paragraph.)
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