JAKARTA, June 5 (Reuters) – Indonesia’s central bank will prepare technical regulations that reflect its wider mandate to support economic growth following the passage of a sweeping new financial system law, its spokesperson said on Friday.
Bank Indonesia supported the law and had provided its feedback for the legislation during the deliberation process, spokesperson Ramdan Denny Prakoso said in a statement.
Parliament on Thursday passed a new law that doubles down on BI’s role to support the economy by adding “real sector growth” and “job creation” into its mandate, adding to its existing objectives of maintaining price and exchange rate stability as well as pursuing sustainable economic growth.
Analysts have raised concerns about parliament’s new powers to evaluate and give binding recommendations to Indonesia’s financial institutions, including the central bank, as well as a change in the mechanism enabling members of BI’s board of governors to be removed.
The law has added to investor concerns about potential interference in the central bank’s operations to ensure compliance with President Prabowo Subianto’s big-growth agenda, as his administration sticks unswervingly to his target of 8% GDP growth by 2029 while battling challenges on multiple fronts.
The new law has not yet been made public and lawmakers and the government have only disclosed certain details.
“BI will prepare the necessary implementing regulations in accordance with the regulatory mandate given to BI after (the new law) is officially enacted,” Ramdan Denny said.
The central bank will continue to set its policy mix to support national economic stability and contribute to sustainable economic growth, and will work with the government and parliament to meet its objectives, the spokesperson said.
(Reporting by Gayatri Suroyo; Editing by David Stanway)
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