Indonesia: Parliament hears testimonies backing wider BI mandate

  • An Indonesian parliamentary committee overseeing the drafting of a central bank law amendment on Tuesday heard recommendations from experts who called for the expansion of Bank Indonesia’s (BI) mandate, but insisted it must remain independent.
  • Anggito Abimanyu, a former finance ministry official who runs Indonesia’s multi-billion dollar haj fund, Piter Abdullah, an economist and former BI employee, and Islamic finance academic Abdul Qoyum suggested BI take on the task of overseeing economic growth on top of managing the value of the rupiah.
  • They made the comments in the legislative body’s (Baleg) first hearing for the amendment after receiving recommendations from a panel of internal experts on 31 Aug 20.
  • Anggito, who said he was involved in the 2004 amendment for the BI law, praised BI’s current institutional strength, but noted that many central banks elsewhere were also pursuing macro-economic policy objectives.
  • “As in many other countries, BI can be transformed to become a central bank that remains independent but (works) in synergy with the government to support economic growth and employment,” he said.
  • Both Anggito and Qoyum supported allowing BI to buy bonds in the primary market during emergency situations, something BI has only done in response to the pandemic.
  • However, Piter cautioned against amending the law to tackle short term problems arising from the current health crisis. He said any amendment must be done with long term focus.
  • During the hearing, some Baleg members expressed support for BI remaining independent, though coordinating more fully with the government.
  • Achmad Baidowi, deputy head of Baleg, said the new recommendations might be integrated into the bill that lawmakers are drafting.
  • Baleg plans to bring the draft for a parliamentary vote before 9 Oct 20. If approved, the bill will be proposed to the government.

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