BoT against passing the buck

Bank of Thailand (BoT) governor Prasarn Trairatvorakul has opposed the cabinet's decision to shift the responsibility for 1.14 trillion baht in debt stemming from the economic crisis in 1997 from the Finance Ministry to the central bank.

Bank of Thailand governor Prasarn Trairatvorakul (Photo by Thiti Wannamontha)

"Transferring the debt might affect the BoT's work.

"Moreover, this debt was not created by the BoT but stemmed from the government's policy to use the central bank as a mechanism for addressing the problem," Mr Prasarn said on Wednesday.

He said the confidence of foreign investors would also be affected.

"The BoT's financial status is not as strong as the government understands it to be," the governor said.

The central bank currently has a negative equity of more than 400 billion baht and transferring the responsibility for the additional debt would add substantially to this, he added.

The cabinet yesterday agreed to transfer responsibility to the BoT for 1.14 trillion baht in debt in a move to cut the government's debt repayments by up to 70 billion baht per year and give the Finance Ministry greater leeway to undertake new borrowing to finance future investment programmes.