Sri Mulyani: BI needs to be 'cleaned up'
Sri Mulyani: BI needs to be 'cleaned up'
JAKARTA (JP): The House of Representatives does not need to
revise Law No. 23/1999 on the independency of Bank Indonesia, but
the central bank needs to be "cleansed" of the problems resulting
from past mistakes, a noted economist said.
Sri Mulyani, secretary-general of the influential National
Economic Council (DEN), said a cleanup was needed to assure the
public that Bank Indonesia would not abuse its independency, and
so that it could implement its independent status effectively.
"The reputation of Bank Indonesia has so far been questioned
due to various problems," Sri told a seminar on the weekend.
She said the possible abuse of channeling of massive amounts
of Bank Indonesia liquidity support to ailing banks between 1998
and 1999 and a further delay in the publication of the audit
results on the Bank Indonesia 1999 books were among the problems
creating a negative image for the central bank.
She also pointed out that Bank Indonesia senior deputy
governor Anwar Nasution once described the central bank as a "den
of thieves".
Many analysts have said the former authoritarian government of
president Soeharto had long abused the role of Bank Indonesia,
especially as the central bank was still part of the Cabinet at
the time.
Sri said prior to giving independent status to Bank Indonesia,
the noted internal problems should have been cleaned up first to
assure the public that the monetary authority could implement its
job effectively.
"This kind of sequencing was not there when Law No. 23/1999
was approved. So what's happening now is that the law tends to
provide protection toward efforts to correct the past mistakes,"
Sri said.
But she disagreed to calls for the House to amend the law now,
particularly amid the conflict between Bank Indonesia Governor
Sjahril Sabirin and President Abdurrahman Wahid.
"Revising the law now would not be appropriate because of the
escalating clash between Sjahril and Gus Dur. People will be
biased and not objective," she said, referring to the President
by his popular nickname.
There has been growing pressure for the House to revise the
Independency of Bank Indonesia Law, approved by the House in May
1999, following the outbreak of the showdown between the two
prominent figures last week.
Sjahril was named a suspect in the high-profile Bank Bali
scandal early last week by the Attorney General's Office.
But Sjahril denied any involvement, and told the public that
this was merely a political ploy to force him out of the central
bank before his term ends in 2003.
Sjahril also said the President repeatedly asked him to step
down from the central bank or he would risk becoming a suspect in
the Bank Bali case, raising concern that the President was
intervening.
He also said calls to amend the law were part of efforts to
oust him from Bank Indonesia.
Under the new law, members of the Bank Indonesia board of
governors can not be dismissed unless they are proven to have
committed a crime or are permanently unable to perform the job.
The law also ensures that Bank Indonesia is free from
government intervention in designing its monetary policies.
Meanwhile, University of Gadjah Mada economist Arief Karseno
supported calls to amend the law to allow the government to also
coordinate with Bank Indonesia in designing economic policies.
Arief said under the current law, Bank Indonesia could freely
design its own monetary policies without having to coordinate
with the government.
He also said the current law did not clearly stipulate the
jobs of Bank Indonesia.
He pointed out that chapter seven of Law No. 23/1999 only
stipulated that Bank Indonesia's objective was to attain and
maintain the stability of the value of the rupiah.
Arief said this did not mean that Bank Indonesia had a duty to
control the exchange rate of the rupiah.
"This kind of situation will be dangerous to the economy," he
said. (rei/swa)