Bank of Thailand Deputy Governor Atchana Waiquamdee comments on discussions between the finance ministry and the central bank over a proposal to create a sovereign wealth fund. She spoke in an interview today in Bangkok.
Finance Minister Thirachai Phuvanatnaranubala has asked the central bank to study a proposal to use part of the nation’s foreign reserves to set up a sovereign fund.
The foreign reserves should be used to back bank-note printing and as a cushion during a worst-case scenario of significant capital outflows, Atchana said.
“The excess can be considered whether we should put it in the sovereign wealth fund.”
“The first condition is that you need to bring from our balance sheet both assets and liabilities not only assets, because if the government does that it will set a precedent for any governments in the future that may do the same thing -- take something from the reserve.
Other conditions include a clear investment strategy and good governance without any political interference, she said.
‘‘We do not straightly object to setting up a sovereign wealth fund. But you need to think thoroughly.
‘‘One thing we shouldn’t do is use the reserve to build infrastructure in the country because foreign reserves in the form of foreign currency is set up to meet obligations of foreigners, not for use internally. Otherwise, it will be like printing money.’’
On the potential for conflict between the government and central bank:
‘‘In fact, the conflict is normal for the central bank and the government because we have different KPI (Key Performance Indicators). For the government, the KPI is only in the short term. They look at it in terms of two years or six months, but in our case we have to look at the long term because this is an organization that has been assigned to take care of economic stability.
‘‘With different KPI, we have to understand each other and try to sit down and talk in the room, not in the newspapers. We should talk it over and get the thing that is best for the country.’’