In­done­sian panel ap­proves Mar­to­war­dojo as cen­tral bank chief

The Pak Banker - - FRONT PAGE -

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.”

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