Embattled Thai Finance Minister Amnuay Viravan resigned on Thursday, sending the nations currency and stock markets into a nose dive.
Amnuay has submitted his resignation letter to the prime minister, Sornchai Montriwat, deputy secretary general to the prime minister for political affairs, told reporters.
Commerce Minister Narongchai Akrasanee, who was chosen by Amnuay to be part of his economic team, said he would also resign.
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I can confirm that I will resign although I have not submitted my letter, which I expect to do by this weekend, Narongchai told reporters.
Amnuays departure sparked a major plunge on the battered Thai stock market and caused nervous foreign exchange dealers offshore to unload the baht for the safer U.S. dollar.
The Thai stock index, now at its lowest in 98 months, plummeted more than four percent in morning trade to a low of 462.38 on broad selling, brokers said. At 0455 GMT, the index was down 17.72 points, or 3.67 percent, at 465.22.
The baht was sold in the offshore and onshore markets. It was trading offshore at 26.100/300 against the dollar in early trade, compared with 23.530/630 late on Wednesday.
The unelected Amnuay became finance minister in December after Prime Minister Chavalit Yongchaiyudh chose him to join his six-party coalition government. which came to power after a general election.
Chavalit is set to reshuffle his cabinet, but analysts said finding a replacement for Amnuay would be hard. Government sources said the premier had already approached three technocrats for the job.
They are Olarn Chaipravat, president of Siam Commercial Bank, former finance minister Viraphongsa Ramangura, and Export-Import Bank chief Pridiyathorn Devakul, a source told Reuters.
Political sources said Amnuays resignation was triggered by rifts between him and rivals within the government over his handling of the ailing economy.
Amnuay tendered his resignation after losing an intra-government battle over a plan to raise excise taxes for some consumer items.
He had proposed the tax increase on the products to raise funds for the government because the current economic downturn had caused a shortfall in revenue. But his political rivals in the government managed to get the cabinet to reverse the decision.
Amnuay said after meeting Chavalit that his departure would not lead to major changes in the governments approach to managing the Thai economy, which is going through its worst period in more than a decade.
The finance and property sectors have been hit by bad loans and a liquidity crunch, the baht has come under speculative attack, consumer and investment spending has slowed and exports have fallen.
Economic growth this year is seen officially at 5.9 percent, the slowest in more than a decade, against 6.4 percent in 1996. Economists see growth even lower at between three and five percent.
I resigned of my own accord. It is my wish and the wish of many others. I resigned in accordance with political etiquette, he said alluding to his political rivals.
But I would like to remind that the change in the economic field is a sensitive one because it is linked to the fate of the private sector, the government and the stability of the overall economy, he added.