BI reiterates concerns over amendment law<\/p>\n
JAKARTA (JP): Bank Indonesia deputy governor Achjar Iljas
\nreiterated on Friday concerns that the proposed amendments to the
\ncentral bank law might threaten the independent status of Bank
\nIndonesia.<\/p>\n
Achjar said that amendment of the central bank law must be
\nstudied carefully.<\/p>\n
\"What needs to be carefully safeguarded are provisions that
\nensure there will be no policy reversal,\" he told the press,
\nreferring to BI's status before May, 1999 when the bank was
\ntreated simply as a government agency that had to toe the line of
\nthe ruling government.<\/p>\n
He was speaking on the sidelines of a meeting between the
\nHouse of Representatives special team and government
\nrepresentatives discussing the proposed amendments to the central
\nbank law.<\/p>\n
\"The potential threat to the central bank's independence is
\nthere if it is not carefully safeguarded,\" Achjar said.<\/p>\n
Concern over the amendment reemerged following agreement this
\nweek between the government and the House special team to change
\nterminology relating to Bank Indonesia's status from \"being
\nindependent\" to \"autonomous\".<\/p>\n
But Coordinating Minister for the Economy Rizal Ramli
\ndismissed suggestions that the amendment to the central bank law
\nwould threaten the independent status of Bank Indonesia.<\/p>\n
Rizal argued that the terms 'independent' and 'autonomous'
\nwere common in the world's central bank literature.<\/p>\n
But he said that the term 'independent' had a connotation of
\npolitical freedom that would make the central bank as if
\nuntouchable by law.<\/p>\n
He said that the term 'autonomy' was better because it would
\nnot only ensure the freedom of the central bank to manage its
\nfunctions, but would also put the central bank within the state
\nsystem and answerable to the law.<\/p>\n
The International Monetary Fund (IMF) also has expressed
\nconcern, particularly over plans by President Abdurrahman Wahid
\nto oust Bank Indonesia Governor Sjahril Sabirin and his deputies.<\/p>\n
The IMF has said that if the government's sponsorship of the
\namendment was intended only to facilitate dismissal of the
\nincumbent Bank Indonesia board of governors, it would further
\nerode investor confidence in the ailing economy.<\/p>\n
The IMF has delayed the disbursement of its next US$400
\nmillion loan to the country, pending completion of the amendment
\nof the central bank law.<\/p>\n
The government proposed the amendment to the central bank law
\nto the House in November. The House is expected to complete the
\namendment process in the middle of February.<\/p>\n
Under the proposed bill, the Bank Indonesia governor and
\ndeputy governors can be dismissed by the House if they fail to
\nmeet the central bank monetary targets or if they fail to be
\nactive in office for three consecutive months.<\/p>\n
Under the existing law, which was enacted in May, 1999 to make
\nBank Indonesia independent from government designs, the governor
\nand members of the board of governors cannot be dismissed before
\ntheir terms end unless they have been proven to have committed a
\ncrime, are incapacitated or voluntarily resign.<\/p>\n
This has ensured the independency of Bank Indonesia.<\/p>\n
Another concern is the proposal to allow senior members of
\npolitical parties to be appointed to the central bank board of
\ngovernors.<\/p>\n
Critics have said that the entry of politicians to the central
\nbank could make it vulnerable to intervention by the government
\nor political party leaders.<\/p>\n
Critics have said that the proposed amendment is merely
\ndesigned to oust Sjahril and his deputies as part of efforts to
\nclean up the central bank from corruption practices.<\/p>\n
President Abdurrahman Wahid has long demanded the dismissal of
\nSjahril, who was first installed as Bank Indonesia governor
\nduring the last years of the former president Soeharto.<\/p>\n
Rumors have it that Abdurrahman is planning to install his own
\npeople at the helm of Bank Indonesia. (rei)<\/p>",
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"sponsor": "Okusi Associates",
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