Govt, House decide to postpone debate on BI law until May
Govt, House decide to postpone debate on BI law until May
JAKARTA (JP): The government said on Wednesday it would delay
until May discussions with the House of Representatives on the
amendment of the central bank law to allow the International
Monetary Fund (IMF)-sponsored panel of central bank experts to
review the proposed amendments.
Coordinating Minister for the Economy Rizal Ramli said the
government and the House agreed in a meeting on Tuesday night to
postpone the deliberations on proposed amendments to Central Bank
Law No 23/1999.
"We've agreed to defer deliberations, supposed to be resumed
early this week, until after the House's recess," Rizal told
reporters.
The House would take a recess in April, and would resume work
in the second week of May, he added.
The IMF has asked the government to postpone the deliberations
until an independent panel of experts examined the planned
amendments, which have been one of the key reasons behind the
delay of the disbursement of the latest tranche of the IMF loan
since last December.
The multilateral agency, which is sponsoring a US$5 billion
bailout program for Indonesia, has expressed great concern that
hasty amendments of the law might result in stripping away Bank
Indonesia's independence, which has been established by Law
No.23/1999.
The IMF fears that political meddling with the central bank's
monetary policies would jeopardize the macroeconomic management
of the country.
Many analysts have also criticized the proposed amendments to
the law mainly as a ploy on the part of President Abddurrahman
Wahid to oust Sjahril Sabirin, the current governor of the
central bank.
Under the current central bank law, neither the government nor
the House can sack Sjahril and other members of the board of
governors.
The controversy over the proposed amendments has been one of
the key factors that have set back the disbursement of IMF's
latest US$400 million loan tranche to Indonesia.
The other important reasons are concerns over fiscal
decentralization issues, and the delayed divestment of two
nationalized banks.
Rizal said that it was the government that asked the House to
delay the amendment process.
"We need ample time to allow for a comprehensive review by the
panel of experts," he explained.
Members of the panel include two former central bank governors
from Indonesia and two from Chile and New Zealand.
"As for the Indonesian experts, we will announce their names
in due time," he said.
The establishment of the expert panel followed Rizal's meeting
with IMF First Deputy Managing Director Stanley Fischer last
month.
Separately, assistant to the Coordinating Minister for the
Economy, Dipo Alam dismissed suggestions that the postponement of
the debates was solely aimed at seeking the panel's
recommendations.
He said that there was simply not enough time to finalize
deliberations on several articles of the central bank law before
April.
"We won't be able to complete discussions before April, even
if we go ahead now; so we might as well as postpone it," Dipo
told The Jakarta Post.
He said discussions were still deadlocked on several articles
of the proposed central bank law.
Dipo added he had asked the IMF not to link the amendment of
the central bank law with the Fund's loan disbursement.
According to him, further delay of the disbursement of the
third tranche of the loan would hinder Indonesia's recovery, and
would ultimately hurt the IMF's own interests.
Although the government has claimed that almost all reform
targets have been completed, the IMF has yet to announce when it
would send a team to Indonesia to review the next reform package
to be stipulated in the new letter of intent.
Uncertainty over the team's arrival has been further eroding
international confidence in Indonesia's economy.
The Paris Club, a group of Indonesia's main foreign sovereign
creditors, said earlier it may cancel new debt rescheduling talks
if the country fails to reach an agreement with the IMF
soon. (bkm)