Jokowi backs central bank mandate to aid Indonesia’s growth

Jokowi backs central bank mandate to aid Indonesia’s growth

The Edge Markets - World·2021-04-08 05:05

(April 7): President Joko Widodo is backing a push to expand Bank Indonesia’s mandate to include bolstering the economy, throwing his public support behind a legislative move that some analysts see as risking the central bank’s independence.

Bank Indonesia shouldn’t just manage the currency, but also should support sustainable economic growth and job creation, Jokowi, as the president is known, said Wednesday in an interview in Jakarta. After a year when Indonesia struggled with its first recession in two decades, the economy is set to grow as much as 7% in the second quarter compared to a year earlier, he added.

“Of course I support Bank Indonesia to add growth and job creation to its mandate,” he said in a discussion at the presidential palace, where anti-virus measures included masks, face shields and clear screens on the table. He added: “Bank Indonesia will remain independent.”

The benchmark Jakarta Composite Index of shares extended gains to 0.6% after his remarks, while the rupiah reversed an earlier loss to strengthen 0.1% to 14,495 a dollar.

The president’s comments will be finely parsed by global investors, who last year were shaken by a similar attempt to increase government oversight of the central bank. Any pushback could worsen pressure on the rupiah and government bonds, which in recent months have been battered by a sell-off in emerging-market assets.

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