Indonesia: Jokowi pledges central bank to remain independent

  • Indonesian President Joko “Jokowi” Widodo pledged on Tuesday that the country’s central bank would remain independent, a day after a panel of experts advising parliament recommended that government ministers be given voting rights at policy meetings.
  • In proposals that could amount to the biggest shake-up of the monetary authority in two decades, the panel also suggested economic growth and employment be added to Bank Indonesia’s (BI) mandate among other amendments to Indonesia’s central bank law.
  • Analysts have warned the proposals could raise questions over BI’s independence and Indonesia’s track record of prudent macroeconomic policymaking, although some also said reform was needed to ensure BI could meet new challenges and support Southeast Asia’s biggest economy during the pandemic.
  • Jokowi told a briefing with foreign correspondents that the central bank would remain independent, when asked about the recommendations, adding he had no plans to issue an emergency decree to change BI’s role.
  • When asked if the so-called “burden-sharing” scheme would continue, Jokowi said: “If our economic growth reaches 4.5%-5.5% (in 2021), maybe not in 2022”.
  • The president said he would be content even if Indonesia continued to post negative growth by 3Q20 as long as it recovered from the 5.32% contraction in 2Q20.

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