January 15, 1999
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| January 15, 1999 | atimes.com | |
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| Southeast Asia Bank Indonesia to cease providing credit to govt. programs JAKARTA - Bank Indonesia will ceaseproviding credit to government programs aimed at empoweringsmall businesses, agricultural industries and cooperatives,Minister of Finance Bambang Subianto told the House Wednesday. He said the function would be taken over by a specialinstitution which the government would soon create.''Giving credit to these programs will no longer be the dutyof the central bank, except [in its capacity as] a lender oflast resort,'' he said. Meanwhile, Bank Indonesia director Achyar Ilyas, said thatas such, the government should be ready to face financialdifficulties as it could no longer come to the central bankfor financial help. ''The government can no longer turn to Bank Indonesia forhelp. It should find domestic or foreign loans, issuecommercial papers or promissory notes [if it needs funds],'' hesaid, adding that the central bank could buy the commercial papersthrough the secondary market. However, the decision could bring a negative impact on BankIndonesia, which does not have the power to control themonetary system, he said. ''So if the government needs money, the central bank has tobuy (commercial papers). It no longer has monetary control butit is relevant to the central bank's independence,'' Achyar said. Subianto said that under the bill on the central bank beingdiscussed by legislators, Bank Indonesia's function ofmonitoring banks will be transferred to an independentinstitution to be formed through an act. The institution will be established in 2000, he said.''It is aimed at avoiding conflicting interests betweenkeeping monetary stability and monitoring banks,'' he said. Subianto also called for Bank Indonesia's function to be revisedto enhance the stability of the rupiah. According to him, the revision would read, ''to determineand carry out monetary policies, and to regulate andfacilitate the application of the monetary system." He maintained the existing formulation on Bank Indonesia'stasks and functions contains some weaknesses, such as the lackof clarity on its responsibility regarding the maintenance ofthe rupiah's stability, and its authority in regulatingmonetary policies, which are generally different from thestandard tasks and functions of other central banks. (Asia Pulse/Antara) | |||||||||
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