JAKARTA (Reuters) – Bank Indonesia governor on Wednesday said there had been talks about the central bank’s mandate during discussions on parliament’s planned revision to a 2023 financial law, but underlined no changes were expected.
Governor Perry Warjiyo’s comments came after BI kept interest rates unchanged against a backdrop of turmoil in local markets on concerns about global trade wars and the government’s fiscal policy.
Warjiyo was responding to a question in a press conference regarding plans to revise the 2023 Development and Strengthening of the Financial Sector Law, after the Constitutional Court ordered lawmakers earlier this year to review the law on matters related to the independence of the state deposit insurer agency.
Parliament is currently discussing the law but there have been concerns lawmakers might also evaluate the central bank’s role and rules around government bond purchases, according to local media reports.
Passed in late 2022 and codified in 2023, the financial law widened BI’s mandate to include supporting sustainable economic growth and formalising its direct purchases of government bonds, which it had done during the pandemic. Previously, its mandate was rupiah and price stability.
“Discussions regarding the law is to emphasise on how BI pursues its objective … It does not mean there is a change to the construction of the law,” Governor Perry Warjiyo said.
Talks regarding the revision have been about clarifying the meaning of sustainable economic growth, which BI has been interpreting as maintaining financial market stability and creating jobs, in synergy with other authorities, Warjiyo said.
“BI will continue to prioritise stability to support sustainable economic growth,” he said.
He also said BI’s purchases of government bonds in the secondary market this year would be aligned with its plans to provide liquidity to the financial sector.
BI has bought bonds worth 47.31 trillion rupiah ($2.86 billion) in the secondary market so far this year, Warjiyo said.
He has previously said BI would be ready to buy bonds in the secondary market to support the government’s affordable housing programme.
($1 = 16,520.0000 rupiah)
(Reporting by Gayatri Suroyo and Stefanno Sulaiman; Editing by Kate Mayberry)
