House names Anwar for 2nd key position at BI

House names Anwar for 2nd key position at BI

JAKARTA (JP): The House of Representatives picked on Monday
outspoken economist Anwar Nasution to hold the second top
position at the central bank for a five-year term.

Anwar, the most vocal critic of the central bank since the
early 1980s, was selected for the newly created post of senior
deputy governor of Bank Indonesia from three candidates whose
names were proposed by President B.J. Habibie on June 4.

Anwar's contenders were the president commissioner of state
Bank Mandiri, Binhadi, and the deputy for fiscal and monetary
policy at the National Development Planning Board (Bappenas),
Sukarno Wirokartono.

Head of House Commission VIII for state budget and finance
Tayo Tarmadi said Anwar was picked because he had the concepts
and strategy to help Bank Indonesia become fully independent in
line with the country's new central bank law.

"Anwar also has a strong commitment to improve the image of
Bank Indonesia," he added.

Anwar is the dean of the faculty of economics of the respected
University of Indonesia. He is also president commissioner of
state-owned cementmaker PT Semen Gresik.

Tayo said Anwar would have to leave his other posts.

Anwar has been a strong critic of the government's past
economic and banking policies, which reportedly contributed to
the current economic crisis.

During a recent hearing with House commission VIII, Anwar said
one of the duties of the senior deputy governor was to assist the
governor of the central bank to attain short-term monetary
targets as agreed with the International Monetary Fund, which is
leading a bailout package for the country.

Anwar, however, said the IMF programs needed adjustment to
reflect the real condition of state and local businesses.

"We have to create home grown programs which are debated with
the House and the public," he said.

He also vowed to stamp out corruption at the central bank in a
bid to boost the image of Bank Indonesia as the country's
monetary authority.

Legislators also approved on Monday the reappointment of six
central bank deputy governors, who previously served as
directors.

Subarjo Joyosumarto and Achjar Iljas were both appointed
deputy governors for three-year terms, Achwan and Dono Iskandar
for two-year terms, and Iwan Prawiranata and Aulia Pohan one-year
terms.

Under the new central bank law, approved by the President in
May, the House has a greater say in deciding on key positions at
the central bank.

Habibie in May reappointed Bank Indonesia Governor Sjahril
Sabirin to lead the central bank for another four year-term, and
Miranda S. Goeltom as deputy governor also for a four-year term.
Miranda previously served as a director at Bank Indonesia.

The central bank law is designed to free the central bank of
political intervention and make it independent in deciding
monetary policy.

The central bank governor heads the board of governors, which
includes the senior deputy governor and deputy governors.

Under the law, the President cannot dismiss the governor or
members of the board of governors.

According to the law, the government is obliged to ask for the
advice of Bank Indonesia or to invite the governor to a Cabinet
meeting on economic and monetary affairs.

The board of governors will advise the government on drafting
the state budget or other economic policies related to Bank
Indonesia authority or function.

The board of governors arranges a monthly meeting, in which a
representative of the government is invited, to decide on
monetary policy.

The board of governors also organizes a weekly internal
meeting to evaluate the monthly monetary policy.

The meeting is valid if it is attended by at least half of the
members of the board of governors.

Decision-making can be done through a voting mechanism. In
case of a tied vote, the final decision will be in the hands of
the governor.

Bank Indonesia is targeting a single digit inflation rate this
year. The central bank has also said it intends to continue
lowering its benchmark interest rate to below 15 percent by the
end of this year.(rei)