Indonesian central bank remains independent, burden sharing persists till 2021: president

0 Comment(s)Print E-mail Xinhua, September 4, 2020
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JAKARTA, Sept. 4 (Xinhua) -- Indonesian President Joko Widodo on Friday pledged that the central bank, Bank Indonesia, would remain independent, but its burden-sharing scheme would persist until next year.

The statement came days after a proposal was initiated by the parliament for changes in the lender which may weaken its authority.

The proposal has been poorly responded by economic experts and sent negative sentiment to the Indonesian currency rupiah and the stock market.

"The stance of the government is that the monetary policy of Bank Indonesia must be credible and independent," the president said at the State Palace in a botanical garden in West Java province.

A draft bill which will be discussed by lawmakers proposed changes to the 1999 Central Bank Act, including setting up a monetary council which was expected to be led by the finance minister who would make coordination on policies with Bank Indonesia, and include ministers in the central bank's rate-setting meeting.

The draft also proposed that Bank Indonesia extend its tasks to support economic growth.

The president emphasized that the proposal was initiated by the parliament, not the government, citing that the government has not been discussing it with the parliament so far.

However, Widodo said the central bank's burden-sharing program will continue till next year, local media reported.

Under the program, Bank Indonesia purchases bonds issued by the government in an effort to help fill the budget deficit due to rising spending for efforts to respond to the COVID-19 pandemic.

The central bank has aggressively used its benchmark interest rate instrument to guard rupiah amid strong pressures amid the global economic uncertainty since years ago.

Indonesia, Southeast Asia's biggest economy, has recorded a current account deficit in recent years and relatively flat shipments of products abroad. Enditem

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