Changing the guard of the Central Bank
A few weeks ago, one of the hot issues in Indonesia was the term of the Central Bank Governor, which was about to expire in May this year. Initially, it was almost taken for granted that Agus Martowardoyo would get an extension for a second term. However, the issue came up when Dr. Perry Warjiyo, whose term was set to expire at almost the same time, was not re-nominated for a second term as Deputy Governor. The rumor mill became very active about the possibility that the position of Central Bank Governor was no longer assured for Agus Martowardoyo.
Several names were speculated to be the candidates for the Central Bank Chair, including current Minister of Planning Bambang Brodjonegoro, former Finance Minister Chatib Basri, Central Bank Governor Agus Martowardoyo and Perry Warjiyo, the Deputy Governor of the Central Bank. Later on the names were narrowed to two strong candidates, Bambang Brodjonegoro and Perry Warjiyo.
Finally, President Joko Widodo decided to nominate a sole candidate as Governor of Bank Indonesia, Dr. Perry Warjiyo.
There have been times in the past when the Indonesian President nominated more than one candidate for the position of Governor, but ideological politics as well as money politics played predominantly in the game, and this led to a major corruption scandal among parliament members. In the most recent nomination, President Susilo Bambang Yudoyono finally nominated a sole candidate, Agus Martowardoyo. Prior to that, President SBY also nominated a sole candidate for the position, Dr. Boediono, who later was elected Indonesia's Vice President. In the previous instances, the sole candidate received unanimous confirmation from the parliament. Similar to his predecessors, the 11th Commission of the Indonesian parliament convened on March 28, 2018 and agreed to give unanimous approval, confirming Dr. Perry Warjiyo as the Governor of the Central Bank of Indonesia. This will be finalized by the decree of the President.
On the external front, the Central Board of Statistics released an interesting report on the trade balance for the month of February 2018. Exports for the month declined considerably while imports declined more sharply, causing the trade deficit to narrow significantly. Exports reached $14,096.8 million, considerably lower than the previous month at $14,553.4 million, a decline of 3.14%. However, compared with the same period of the previous year, total exports increased by 11.76%. Meanwhile, imports in February 2018 declined at a faster pace, by 7.16% from the previous month, to reach $14,212.8 million. Compared with the same period of 2017, imports grew by 25.18%. February's export and import activity resulted in a trade deficit of $116.0 million, significantly lower than the deficit of $756.0 million in January.
The Central Board of Statistics also released the inflation report, which showed relatively mild inflation for February, at 0.17%. With that performance, year-over-year inflation stood at 3.18%, a level at the lower end of the target corridor of the Central Bank. Even though there was concern about the Fed Funds rate increase, Bank Indonesia decided to keep the benchmark rate constant at 4.25% at its monetary policy meeting in March.
Now read on...
Register to sample a report