Thai central banker to run post-coup economy

October 09 2006 at 08:52AM


Pridiyathorn Devakula, named Thailand's post-coup finance minister on Monday, has built a reputation for keeping politics out of the central bank while keeping the currency and financial sector stable.

Pridiyathorn, born to an aristocractic family in 1947, assumed the role of economic czar under Prime Minister Surayud Chulanont after five years as head of the central bank, and charged with steering Thailand over hurdles threatening to disrupt growth.

He takes over as the economy shows signs of slowing growth under the weight of high oil prices and nearly a year of domestic political turmoil that culminated in a coup against Prime Minister Thaksin Shinawatra.


'Self-sufficiency'
Pridiyathorn, a top executive at a major Thai bank in the 1970s and 1980s, faces the immediate task of assuring foreign investors there would be no serious changes in the open-market policies pursued by Thaksin's government, analysts say.

Surayud, a retired army general, has rattled investors by pledging to follow the "self-sufficiency" approach of revered King Bhumibol Adulyadej after Asia's 1997/98 economic crisis.

His guiding economic light would be indicators of people's happiness and prosperity, not gross domestic product, Surayud said.

"I don't think Thailand will embark on a sharp policy turn," said economic professor Somphob Manarangsan at Chulalongkorn University in Bangkok.

"But his first job should be to clarify clearly how and who will implement the policy that he himself said would focus on national harmony and be environmental friendly."

'Politics and the economy are separate'
Pridiyathorn, whose background permits him the honorific title "Mom Ratchawong" reserved for royal descendants, will also have to revive business confidence so the economy can grow the projected 4,5 percent in 2006, the same as in 2005.

His job has been made a bit easier after coup leaders pledged to have a budget ready for January, months ahead of expectations following the long political gridlock as Thaksin fought to stay in power.

The budget would include huge amounts of money for infrastructure projects delayed by the crisis, which should help keep economic growth up.

Pridiyathorn said last week the priority for state investment next year would be improving mass transit systems, industrial logistics and water resource development.

Shortly before the coup, he expressed faith in the private sector as the main growth engine, saying it had proved resilient in weathering problems generated by politics.

"Politics and the economy are separate. The Thai private sector can help the economy sustain growth momentum despite an unfavourable environment and the recent political uncertainty," he said last month.

"The key is businesses should not be discouraged to the point of keeping to postpone investment," said Pridiyathorn, who holds an MBA from the Wharton School at the University of Pennsylvania."

Thaksin picked him to head the Bank of Thailand after his predecessor was fired in a row over the level of interest rates.

But Pridiyathorn won considerable respect for resisting political pressure and becoming one of the region's most hawkish central bankers with an aggressive series of interest rate rises to tame inflation.

He also drove a management shakeup at state-owned Krung Thai Bank over the objections of several powerful cabinet ministers and oversaw a doubling of foreign exchange reserves to a record $61,8-billion.

-Reuters