Search for New Thai Finance Minister Begins

The search for a new Thai finance minister will take several days, Prime Minister Surayud Chulanont said on Thursday after the shock departure of his economic tsar further eroded the government's shaky credibility.

"We will take three or four days to consider this. We will know by next week how to adjust or reshuffle the cabinet," Surayud told reporters a day after Finance Minister Pridiyathorn Devakula quit abruptly, blaming cabinet infighting.

It was not clear if the embattled Surayud, a retired general who replaced ousted Prime Minister Thaksin Shinawatra after a bloodless September coup, would heed his critics and sack ministers seen as ineffectual or pursuing personal agendas.

"The credibility of the government has sunk almost to the point of no return," the Nation newspaper said, predicting "a major cabinet reshuffle, which could start from the top". But talk of Surayud's imminent departure was premature, said Graham Catterwell, a retired securities analyst in Bangkok.

"He's unlikely to throw in the towel. The key is to find someone fairly soon to repair the damage done by Pridiyathorn's departure," he said.

Among the candidates floated by analysts and the Thai press were former central bank governor Chatu Mongol Sonakul, who now runs a posh Italian restaurant in Bangkok, and Virabongsa Ramangkura, an economist who was deputy prime minister in 1997 when a baht devaluation triggered the Asian economic crisis.

Another possibility was Kosit Pampiemras, now a deputy prime minister and industry minister, who Surayud said would handle economic matters until a replacement was found.

Surayud had no comment on his former deputy Pridiyathorn, a highly-regarded central bank governor named finance minister in October to keep the economy humming while Surayud and the coup leaders focused on a new constitution and polls later this year. But the initial optimism over his appointment was shortlived.

Policy Changes?

The imposition of capital controls, a drive to tighten foreign business ownership laws and overriding international drug patents has shocked foreign investors worried about rising economic nationalism in Thailand.

At home, a three-year-old separatist insurgency in the Muslim-majority far south has intensified despite Surayud's peace overtures, while New Year bombs in Bangkok have fuelled fears of more violence to come.

The government's struggle to dredge up concrete evidence against Thaksin -- who has been accused of corruption but not formally charged -- has added to its label as ineffectual.

"In the eyes of the public and the media, 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 said.

Whoever is named finance minister will take over an economy beset by weaker consumption and shrinking investment amid the political uncertainty ahead of elections promised later this year.

With Pridiyathorn gone, some analysts suggested the Bank of Thailand may speed up lifting widely criticized capital controls imposed in December to stem the surge of the baht.

The central bank did relax the last remaining controls on foreign inflows into mutual funds, but did not say when other curbs would be lifted.

A bleak economic outlook could see the government favor pro-growth policies, analysts said. "Overall, we see signals that Thai authorities are moving into a more responsive stance, driven perhaps by the deteriorating economic momentum," JP Morgan analyst Sriyan Pietersz said in a note to clients.

The central bank is expected to cut interest rates again next month after the Commerce Ministry said on Thursday annual inflation fell to its lowest in nearly three years in February.

Some analysts expect a bigger reduction than the 25 basis point decrease on Wednesday, which was the second cut this year. "With this soft inflation, the central bank has more room to cut rates at its next meeting, probably as much as 50 basis points because it needs to boost the economy quickly," economist Isara Ordeedolchest of Tisco Securities said.