New minister will be given time to learn the ropes of policies and politics
Thai Prime Minister Chavalit Yongchaiyudh says he will not hand full responsibility for Thailand's troubled economy to his new Finance Minister Thanong Bidaya - or not until he has learnt the ropes, at least.
After returning yesterday from a two-day state visit to Cambodia and Laos, Mr Chavalit said he would retain overall responsibility for economic policy while Mr Thanong looked after more specific financial matters, such as banking, property loans, mergers of financial institutions and currency.
Mr Chavalit said: 'He has the knowledge and the experience, but he should be given time to study policy and to do his job.' Mr Thanong, 49, the former president of Thai Military Bank, is a newcomer to politics and government, having been recruited hurriedly following the resignation of Amnuay Viravan last week.
Mr Chavalit said he had every confidence in Mr Thanong, describing him as a capable man, but said he needed time to study Thai economic policy and familiarise himself with Mr Amnuay's policies.
Mr Thanong spent much of Saturday being briefed by his predecessor and later said he had a clearer picture of the challenges ahead. He also met former finance minister in the Prem government, Suthee Singhasaneh.
Mr Thanong said he intended to focus on balancing the books and would make repaying foreign debt a key target. He said he would review Thailand's high interest rates, which had been imposed to stem capital outflows.
He would not be drawn on his policy towards the baht.
Thailand's balance of payments deficit for the first four months this year was 20 billion baht (about HK$6.1 billion), compared with a surplus for the period last year. This was aggravated by damaged capital inflows resulting from declining international confidence in Thailand's macroeconomic conditions.
This means a depletion of the national foreign reserves. The latest figures are due to be announced by the Bank of Thailand next week. The last official figure given was US$38 billion.
Mr Thanong said he was hoping to ensure smooth capital flows so that Thailand could repay the principal and interest on its foreign debts, which stood at $85 billion, or 45 per cent of gross domestic product, as of May.
Of this, the private sector owed $466 billion and the private sector $19 billion.
Mr Thanong said that during the past few years of economic boom, a large amount of foreign capital had been used in unproductive areas, especially the property sector where debts amounted to 800 billion baht.
The immediate problem facing the country was its ability to repay these debts. Thailand had invested too heavily in the property sector, instead of areas such as export production which generated foreign exchange returns.
The government would seek advice from Thai and foreign experts as well as international organisations in preparing a comprehensive package to address the issue, he said.
Asked if he was worried by his lack of a political base, the non-elected minister said he was confident the Prime Minister would protect him from politicking between factions in the six-member coalition government.
'I am not worried. That is the business of politicians,' he said. 'My duty is only to work for the country.'