IMF stresses need for BI independence
JAKARTA (JP): The International Monetary Fund (IMF) reiterated on Thursday the importance of maintaining the independence of Bank Indonesia and its monetary policy to ensure the recovery of the country's economy.
"It's important for Indonesia to maintain the independence of the central bank," IMF Jakarta representative John Dodsworth told reporters following a meeting with House of Representatives Speaker Akbar Tandjung.
Dodsworth said that the IMF was invited by Akbar to discuss the amendment of the central bank law.
"We gave some inputs and some recommendations ... Some are technical in nature, but they basically try to balance better accountability in Bank Indonesia with preserving the independence of the central bank and the independence of the monetary policy," he said.
"We do see some problems in some of the amendments, but I don't want to go into details of particular amendments at this time," Dodsworth said in response to a question of whether the IMF sees certain problems with the government-proposed amendment of the central bank law.
Elsewhere, Dodsworth also said that the IMF managing director would meet with Coordinating Minister for the Economy Rizal Ramli on Friday at the World Economic Forum in Davos, Switzerland.
Sources said that Rizal would also meet with World Bank president James Wolfensohn at the five-day forum.
The IMF is providing a multibillion dollar bailout fund to help finance the country's economic reform program. Out of the US$5 billion loan promised in January 2000 to the administration of President Abdurrahman Wahid, the fund has already disbursed some $1 billion.
The IMF was supposed to disburse another $400 million loan in December last year, but it delayed the disbursement due partly to concern over the amendment of the central bank law.
The government expects the IMF to disburse the loan sometime between February or March. The IMF loan is seen as crucial in helping to revive investor confidence in the economy.
The House of Representatives special team is currently debating the government-proposed amendment of the central bank law. The legislators are expected to complete the deliberation process later this month or in the middle of February.
Critics have said that the amendment was primarily aimed at accommodating the demand of the President to oust Bank Indonesia Governor Sjahril Sabirin and his deputies, in order to replace them with people close to the President.
The proposed amendment includes the possibility of allowing political party representatives to either head the central bank or become members of the board of governors.
Meanwhile, Akbar confirmed at a press conference that the IMF had insisted that the amendment of the central bank law should not jeopardize the independent status of Bank Indonesia.
"But their recommendations were not meant to intervene with the House ... it was made in the spirit of strengthening the independency of Bank Indonesia," Akbar said.
He said that the independent status of Bank Indonesia was crucial to ensure the recovery of the country's ailing economy.
He also said that the IMF supported the role of the House to monitor the performance of Bank Indonesia in implementing its monetary policy.
Akbar said that the IMF had also recommended the need to form a new body to oversee the operational side of Bank Indonesia.
"The House will monitor the political aspects, while the new body will monitor the operational side," he said, adding that this was taken from a model implemented in Sweden.(rei)