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EDITORIAL: Incoming central bank chief
President Joko “Jokowi” Widodo made the right decision by nominating a sole candidate, Perry Warjiyo, to be the new governor of Bank Indonesia (BI) to replace Agus Martowardoyo, who will end his term in mid-May.
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Bank Indonesia deputy governor Perry Warjiyo speaks during an international seminar held by Bank Indonesia in Jakarta in a April 28, 2017 file photo. Perry is currently nominated by President Joko Widodo to be the new governor of BI. (Antara/Hafidz Mubarak)
P
resident Joko “Jokowi” Widodo made the right decision by nominating a sole candidate, Perry Warjiyo, to be the new governor of Bank Indonesia (BI) to replace Agus Martowardoyo, who will end his term in mid-May. There is always the risk that the House of Representatives, which has yet to confirm the nomination, will reject the sole candidate out of disillusionment of not being given the leeway to choose from several candidates. After all, the current House-Jokowi relationship seems to be testy, especially with the latest tussle over the new law on legislative institutions.
But we think if the House assesses the sole candidate in good faith with the sole purpose of selecting the most capable leader for our monetary management, they should confirm Warjiyo, currently a deputy governor at the central bank.
First of all, Warjiyo will be the first fully fledged BI career executive to become the governor of the central bank in the past ten years. In fact, he is the first BI career executive nominated to become the BI governor since 2008.
This will be quite a psychological boost for the central bank, which between 2003 and 2008 was tainted by a series of corruption scandals that saw three former governors and several other deputy governors sent to prison.
Warjiyo, 59, was the best among the four candidates submitted to the President, which also included incumbent Agus, former finance minister M. Chatib Basri and current National Development Planning Minister Bambang Brodjonegoro.
Warjiyo began his career at BI in 1984 and has since gained rich experience in monetary management and international finance in numerous positions at the central bank. He was the assistant to the governor for monetary management before he was confirmed by the House as a deputy governor in 2013. From 2007 to 2009 Warjiyo was an executive director at the International Monetary Fund in Washington DC.
Given he also has vast experience in macro-prudential management, Warjiyo can meet all the tough requirements needed of a new leader of the central bank in the face of the uncertainty in the financial market and global economy and the new bout of monetary tightening in the United States and Europe.
Yet more importantly, he will be a good partner for Finance Minister Sri Mulyani Indrawati for managing the economy, especially during the next 12 months, when macroeconomic management will enter autopilot mode in view of the preparations for the April, 2019, presidential and legislative elections.
Strong monetary and fiscal cooperation and coordination is set to become even more of an imperative because of the vulnerability of the two portfolios to pressure from vested-interest groups during the upcoming election year.
The market will be more stable if it perceives that the central bank chief and finance minister have impeccable integrity, high technical competence and strong personalities, willing to stand up against political pressure to launch populist measures at the expense of the long-term foundations of the economy.
