Central bank bill doesn't guarantee accountability
Central bank bill doesn't guarantee accountability
JAKARTA (JP): The Econit Advisory Group, a think tank that
concentrates on economic problems, criticized the government's
central bank bill for its lack of clear-cut provisions to
guarantee Bank Indonesia's accountability and transparency.
Econit director Rizal Ramli said on Thursday that without
these two elements, a more independent Bank Indonesia (BI) would
be highly vulnerable to corruption.
"Independence without accountability would make BI like a
state within a state," Rizal told reporters.
The draft law, submitted by the government to the House of
Representatives earlier this month, does not say who the central
bank's directors would be accountable to, he said.
"The board of governors is required by the bill only to report
to the President and the House of Representatives every three
months. But the draft law does not clearly stipulate to whom it
should be accountable and what the consequence would be should
its report not be approved," he said.
To ensure transparency, the central bank must be bound by
disclosure requirements like those imposed on publicly listed
companies, Rizal said.
It should be required to report to the public its financial
indicators such as monetary targets, realization of these targets
and other developments, he said.
Rizal expressed skepticism about the bill's stated intention
of creating a fully autonomous central bank, as the bank's
governor and deputies will still be appointed by the President.
This could leave an opportunity for government intervention,
he said.
"If the governor and his deputies are appointed by the
President, we're worried that the President would put 'his
people' in these key positions as the previous president has
done," he said.
Rizal said that for the appointment process to be more
credible, it must involve the House of Representatives.
"Either the president proposes and the House approves or vice
versa," he said.
But Rizal said that even an independent central bank needed
some sort of controls.
He criticized a clause in the draft that stipulates that the
BI governor and deputy governors cannot be dismissed by the
President, except if they resign or are proven guilty of criminal
acts.
Rizal said the governors and deputies should be liable to
dismissal if they perform poorly.
He urged the government to clarify the central bank's function
in the draft legislation, including the safeguarding of the
rupiah and price stability.
"The rupiah's stability will not necessarily have a positive
impact on the economy if prices are not also relatively stable,"
he said.
Rizal also questioned the effectiveness of the government's
plan to free BI from its current task of supervising the
country's banks and to establish a new body to oversee the
banking system.
If BI no longer supervises the banks, it could lead to
contradictory monetary policies, he cautioned.
Should the government insisted on this plan, it should ensure
that the new supervisory body would also oversee non-bank
financial institutions such as multifinance companies, insurance
companies and the capital market, he said.
Most importantly, he said, the new bank supervisory agency
must hire personnel from the central bank with integrity and high
technical competence.
Rizal suggested that the government also establish a mechanism
to coordinate monetary policies and banking policies. (das)