Thailand moves to end capital controls


Thailand prepared Thursday to lift the last of its controversial capital controls, as the nation’s junta leader and the prime minister scrambled to replace the finance minister who imposed them.

The Bank of Thailand announced late Wednesday that it would remove the last of the controls, which had effectively locked up for one year 30 percent of capital inflows to the country.

News the controls would end came just hours after finance minister Pridiyathorn Devakula’s surprise resignation Wednesday, creating a new crisis of confidence in a government whose popularity has plummeted since it took power after a coup five months ago.

When the capital controls were imposed in mid-December, they sparked the biggest one-day crash in the history of Thailand’s bourse, and forced the government to quickly rescind some of the measures.

That was the first in a series of embarrassing policy flip-flops that have eroded confidence in the government both among investors and among the Thai public.

Thailand’s coup leader, General Sonthi Boonyaratglin, and other top military officials huddled with Surayud early Thursday to discuss who should replace Pridiyathorn and how to stem the political fallout from his resignation.

Thai media assailed Surayud for failing to hold his cabinet together, even raising questions about whether the former army chief could survive the latest setback to his government.

“We expect to see a major cabinet reshuffle, which could start from the top,” the Nation newspaper said.

“The government’s main problems concern its lack of direction and sense of mission, its absence of vision and lack of leadership on the part of the prime minister,” the Bangkok Post commented.

But Sonthi told reporters before the meeting that Surayud would not resign.

“He won’t surrender easily. I used to work with him, I know he is tough,” Sonthi said.

Officials declined to say who might replace Pridiyathorn, but the head of the Export-Import Bank of Thailand, Virabongsa Ramangkura, was widely tipped in Thai media as a leading contender.

Pridiyathorn’s appointment as finance minister five months ago had been welcomed as the former Bank of Thailand governor was tasked with overseeing a team of technocrats that was supposed to guide the country smoothly toward elections later this year.

Instead, Pridiyathorn presided over a series of policy disasters that battered the economy and eroded public support for the government, which a poll last month put at 48 percent, down from 71 percent shortly after the coup.

In addition to the capital controls, Pridiyathorn also championed changes to Thailand’s foreign investment law, which spooked international companies and raised fears that the kingdom was moving toward a new strain of protectionism.