Connect with us

Hi, what are you looking for?


Indonesia to allow former politicians to head central bank, financial regulator

INDONESIA’S parliament and government have agreed on a clause in a new financial bill to allow former politicians to stand as central bank governor, three sources familiar with the discussions told Reuters.

Plans by parliament in the last few years to overhaul how the central bank operates have raised market concerns that Bank Indonesia (BI) could lose independence and its policy making could be at risk from political interference.

Parliament and the government were due to approve a final draft of the bill later on Thursday and a member of the parliament commission overseeing the bill said parliament will hold a plenary session for a final vote on Monday.

The bill will also expand the mandate of BI to support economic growth, on top of managing the value of the rupiah, and allow BI to purchase bonds directly from the government “under certain conditions” set by the president, said one of the sources, who declined to be named as the bill is not public yet.

BI and the parliamentary commissions in charge of the bill did not immediately respond when asked for comment.

BI conducted such bond buying during the COVID-19 pandemic, and the quantitative easing program is set to end this year.

Alongside running BI, politicians who resign from their party will also be eligible to head the Financial Services Authority and the Deposit Insurance Corp.

“Politicians have the same rights like others to run for these positions and in terms of competence, they can do it,” the source said.

President Joko Widodo has previously pledged BI would remain independent.

Tauhid Ahmad, an economist at the Institute for Development of Economics and Finance (INDEF), a local think tank, said while currently no specific rule prohibited a politician from standing for a BI post, a “code of ethics” has stopped them from doing so.

Mr. Tauhid said even though a BI candidate would now have to stand down from a political party, ties with the party would remain strong.

“There is a threat BI’s independence’s will be weakened.” he said.

Currently, BI has a six-member board of governors, who are recommended by the president and elected by parliament. They can come from any background, but five existing members are career central bankers and one has a long career as an economist.

A panel of experts to parliament’s legislation committee had previously recommended that cabinet ministers be given voting rights at BI’s monthly monetary policy reviews and to form a Monetary Council to supervise BI, with seats for the finance minister and a minister in the economics sector.

These recommendations, however, were not included in the latest draft, a source said. — Reuters

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!


Editor’s Pick

<?xml encoding=”utf-8″ ??> Ava Whetstone-Magee, the founder of Avalanche Equestrian talks about the lightbulb moment which led her to start her business at the age...

Editor’s Pick

<?xml encoding=”utf-8″ ??> The exodus of workers from the jobs market over the pandemic has weakened prospects for Britain’s economic growth, the governor of...

Editor’s Pick

<?xml encoding=”utf-8″ ??> Will Polston, talks to Business Matters about how helping ambitious owners to maximise their potential has resulted in him becoming a finalist...


Elon Musk talks about his company’s Starlink project at the Mobile World Congress, Barcelona, Spain, June 30, 2021. — BRISA PALOMAR / PACIFIC PRESS/SIPA...


PHILSTAR FILE PHOTO The National Economic and Development Authority (NEDA) has approved seven “high-impact” projects, ranging from agriculture to transportation, the agency’s top official...


Television (TV) advertising is shifting toward addressable TV, a service that allows advertisers to show different ads to different audiences watching the same program,...

You May Also Like


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.