JAKARTA, Nov 27 (Reuters) - The Indonesian central bank's
mandate is being expanded to include economic growth and
employment, according to a bill awaiting parliamentary debate,
which also includes proposals to overhaul banking supervision.
The draft, reviewed by Reuters, is separate to a plan by
parliament's legislative committee (Baleg) to revise the 1999
Bank Indonesia (BI) Act, a move that analysts worry could
undermine BI's independence and potentially prolong the
pandemic-led debt monetisation.
The new bill, drafted by the government and parliament's
financial committee, calls for pursuing sustainable economic
growth and employment to be added to BI's tasks, on top of its
current mandate of price stability, according to a copy of the
bill and academic papers backing the bill.
It also proposes to permanently allow BI to purchase
government bonds in the primary market to prevent or in the
event of a financial crisis, something that the central bank is
currently only allowed to do in response to the coronavirus
Other measures BI is given authority of under the new crisis
protocols include regulating foreign exchange repatriation and
conversion for Indonesian residents and lending to private
companies through repurchase of their government bonds via
The bill also proposes that BI "must consider the
government's general economic policy" when deciding monetary
On banking supervision, the bill sets up a new forum between
regulators such as BI and the Financial Services Authority to
allow for joint monitoring and details steps to take when a bank
BI's spokesman did not respond to request for comment and a
finance ministry spokeswoman declined to comment.
Baleg, which sets parliament's legislative agenda, will
decide whether to prioritise the new proposals over its own
revision to BI laws in coming days, deputy chairman Achmad
Baidowi told Reuters.
In September, BI Governor Perry Warjiyo said in a
parliamentary hearing he had been consulted by the government
about a planned bill seeking to widen BI's mandate. He said in
reality BI has already taken into account economic performance
when reviewing policy.
BI has this year cut interest rates a total of 125 basis
points, pumped some $48 billion into the financial system and
relaxed lending rules to lift Southeast Asia's largest economy
out of its first recession in more than two decades.
(Additional reporting by Tabita Diela; Writing by Gayatri
Suroyo; Editing by Raju Gopalakrishnan)