Dilemma for Cabinet over bailout decision
CHA-AM The Cabinet faces a dilemma of whether to back a national-agenda package championed by Finance Minister Thanong Bidaya or an economic and financial reform package sponsored by the International Monetary Fund (IMF), sources said.
Failure to adopt the national-agenda package which covers broad, yet bureaucratically unenforceable, measures to put the economy back on track would further discredit Thanong at a time when he is already seen as a lame duck minister.
From the start, Thanong vowed to produce a sweeping agenda to rehabilitate the economy, yet one source said his package lacks the political mandate to make it happen. Instead, all eyes, at home and abroad, are focusing on the IMF package, which Nibhat Bhukkanasut, the director general of the Fiscal Policy Office, has been negotiating tediously with the IMF.
Sources said if the government agrees to adopt the IMF package, in part or in full, Thanong's national agenda will become irrelevant.
Initial question marks over the degree of Thanong's freedom to manage his portfolio have been confirmed by a series of events which clearly illustrate that Thanong is not the man in charge.
He had little say in the appointment of Chaiyawat Wibulswasdi as Bank of Thailand governor and has no direct role in the negotiations with the IMF. Nor did he have any prior knowledge of the controversial removal of MR Chatu Mongol Sonakul from the position of permanent secretary for finance.
Adding to the complications at the Finance Ministry is fiscal policy chief Nibhat's threat to resign from the civil service if he is not promoted to the vacant post of permanent secretary, sources said.
Yet the acting permanent secretary, Supachai Phisitvanich, has developed close ties with Interior Minister Snoh Thiengthong and is a favourite to take over from Chatu Mongol.
At the annual economic seminar sponsored by the US Information Service, former finance minister Virabongsa Ramongkura argued that it is necessary to adopt the IMF package in full, so that the government can settle down and tackle the financial sector crisis as soon as possible.
''Allowing the crisis to prolong will further deepen the problem, since Thailand is sitting on borrowed reserves that will continue to flow out of the country in so far as the government fails to restore confidence in its macro-economic management," he stressed.
Virabongsa warned that the IMF package, to be considered by the Cabinet tomorrow, must be comprehensive or it will not win back confidence the only catalyst for a return of capital inflow to give the country the liquidity it needs and help stabilise the baht.
The government will need to set a specific macro-economic target and spell out how it will achieve it.
''Unlike the previous baht devaluation, this time around the public is forcing the government to take the bitter medicine and sort things out," he said.
''If the programme is inadequate, or a compromise, our lenders will have no confidence in us. I don't want to imagine what will happen then," Virabongsa added.
He urged that knowledge of the package be disseminated to the public in a timely manner.
BY THANONG KHANTHONG