Soedradjad's dismissal draws mixed reactions

JAKARTA (JP): The sudden removal of Soedradjad Djiwandono from the top post at Bank Indonesia (BI), central bank, Tuesday drew mixed responses yesterday.

Many observers linked it to the government's insistence to implement the controversial Currency Board System (CBS), which, it is understood, Soedradjad does not entirely agree with.

The chairman of House Commission VIII for the state budget and finance, I Gde Artjana, was quick to dismiss speculation that political motives had caused President Soeharto to take the tough decision.

He said the dismissal was an acceptable option in the sense that it was intended to prevent divisions emerging during the plan's implementation.

"In such a difficult situation we may need a sacrifice. It however will not adversely affect the country's efforts to cope with the economic woes. Instead, it will make the plan a success," said Artjana of the Armed Forces faction.

Soedradjad, who was due to end his term in March, was replaced by BI director Sjahril Sabirin Tuesday. The new governor will be sworn in today.

Political analyst Muhammad A.S. Hikam said Soedradjad's replacement raised eyebrows as to the government's commitment to overcome the financial crisis.

He said Soedradjad had contributed a lot to improving Indonesia's monetary system, and therefore should not have been removed.

Economist Didik J. Rachbini was more cautious, saying that it was Soeharto's prerogative to change the guard at BI.

"The President must have certain considerations when dealing with the monetary authority. But maybe Soedradjad was removed because he opposed the CBS plan,"

Inevitable

Artjana deemed the CBS was inevitable now that the International Monetary Fund's economic reform package was not enough to help the government shore up the rupiah's free-falling exchange rate.

"Radical measures suggested by the IMF have proven to be not helpful enough, and the CBS is the most difficult option we have to take. This tough decision needs support from all sections of society, so those who oppose it must be willing to stay away," Artjana said.

Hikam said he believed Soedradjad's dismissal was caused by his disagreement with the government's plan to adopt the CBS and it would raise questions from the global community on the government's commitment to proceed with austere economic reforms.

"I'm afraid there will be more pressure from the international community following the decision," said Hikam of the National Institute of Sciences.

Another economist, Faisal Basri, suggested an intellectual discourse on whether the CBS would help the ailing rupiah recover.

"It seems to me that the CBS is definitely going to happen without any debate concluding it is the best available option," he said. (byg/amd)