Indonesian panel approves Martowardojo as central bank chief
Indonesian lawmakers Wednesday approved Finance Minister Agus Martowardojo to become the next central bank governor after he said his priorities would be a stable exchange rate and keeping inflation low.
Commission XI, a parliamentary panel for financial affairs, voted in favor by 46 to 7, with one abstention, after questioning Martowardojo for about eight hours on bank ownership, market reciprocity, inflation management and monetary policy. President Susilo Bambang Yudhoyono had nominated Martowardojo, 57, to succeed Governor Darmin Nasution, whose term ends on May 23.
“To keep inflation low is the main job of Bank Indonesia,” said Agus Martowardojo, Indonesia’s minister of finance. “We need to be cautious, as when investors see there’s inflation pressure, it can trigger capital outflows.”
Once Parliament endorses the commission’s decision, the approval will allow the president to reshuffle his top economic team as Southeast Asia’s biggest economy grapples with a weak- ening currency, a current-account deficit and elevated inflation. Focus now turns to whom Yudhoyono will name finance minister as the government prepares to adjust its fuel-subsidy policy to curb oil imports and free up funds for infrastructure. “The interesting question is who will be the next finance minister,” Agost Benard, an associate director at Standard & Poor’s in Singapore, said before the decision. The central bank “will continue to be inflation targeting with an eye on economic growth. And that will happen in strong cooperation with the finance ministry.” The rupiah was the worst performer last year among Asia’s 10 most- traded currencies excluding the yen, and forecasts for the currency are being cut by the most among Southeast Asia’s emerging-market currencies as Indonesia’s sliding foreign reserves prompt investors to sell the nation’s assets.
Rupiah forwards reached the weakest level since January. The central bank will “guard rupiah stability in line with its fundamentals,” Martowardojo said in response to lawmakers’ questions March 25. Bank Indonesia won’t defend the rupiah beyond a certain level, he said. Emir Moeis, Commission XI chairman and a member of the opposition Indonesian Democratic Party of Struggle led by former President Megawati Soekarnoputri, called on Yudhoyono to appoint a new finance minister quickly.“President SBY needs to appoint the new finance minister soon to give confidence to the market,” he said after yesterday’s vote. “If the president takes a long time, it will have a negative impact on Indonesia’s market.”