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)