Executive decrees to worsen confidence: Korn
The government is hurting investor confidence instead of boosting it, through the issuance of two executive decrees that involve the operations of the Bank of Thailand, said former finance minister Korn Chatikavanij.
During the parliamentary debate on Feb 1, he said that the decrees, to endorse the Financial Institutions Development Fund's Bt1.14 trillion debt to the central bank and to force the central bank to launch a Bt300 billion soft loan package, are intervening the BOT's operations which could hurt confidence and convince investors that Thailand does not honour fiscal disciplines.
While expressing concerns over lack of clear spending plans, he said that the government's decision to issue executive degrees rather than laws is depriving MPs' rights in discussing details of the spending.
He was unsure whether the government's guarantee would be needed after the transfer, if the FIDF is to issue new revolving bonds.
On the proposal that BOT charges commercial banks more to repay the FIDF debt, he said this would weaken the entire banking sector. Confidence could also be hit as the Deposit Protection Agency needs as much as Bt200 billion to fully guarantee all deposit accounts (maximum Bt1 million each). Though it has collected about Bt80 billion now, it will receive less as some fees would be used to tackle FIDF's interest burden.
Today, he also posted on his Facebook page, detailing why the two executive decrees are violating the Constitution. The government is criticised for the haste.
Upon doubts from Democrat MPs and some senators on the constitutionality of the two decrees, the Constitution Court is expected to announce next week if it would review the case.
