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View all search resultsBank Indonesia: Finding a new governor, managing expectations
The job requires not only technical expertise in economics but also judgement, communication, crisis management and political independence.
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A man walks past the Bank Indonesia (BI) headquarters on Sept. 2, 2024, in Jakarta. (Reuters/Ajeng Dinar Ulfiana)
T
he leadership changes in Bank Indonesia (BI), triggered by the sudden resignation of Perry Warjiyo from the governor’s post, are taking place at the worst possible time.
Indonesia’s economy is facing global economic turmoil due to the prolonged war in the Middle East, while at home, BI is struggling to strengthen the rupiah, which has been falling sharply this year. Also, this took place when BI has been navigating a difficult trade-off between maintaining monetary stability and supporting economic growth as the Purchasing Managers' Index and consumer confidence index are declining.
The unexpected resignation would create uncertainty and renewed concerns about central bank independence. Perry’s departure could be a loss of policy continuity rather than a reflection of poor performance.
Perry’s governorship of BI was marked by strong macroeconomic stability, but mixed on exchange-rate management and economic growth. He successfully navigated multiple global shocks while preserving macroeconomic stability.
His leadership coincided with several extraordinary shocks — the COVID-19 pandemic, the global inflation surge after Russia's invasion of Ukraine and tightening by the United States Federal Reserve — which makes his record more impressive.
Indonesia experienced high inflation in 2022 because of global food and energy prices, but inflation fell back into BI's target range relatively quickly. Compared with many emerging markets, Indonesia's inflation performance was very good.
During COVID-19, BI coordinated closely with the government and financial regulators to provide liquidity, purchase government bonds during the pandemic and prevent a banking crisis. Indonesia avoided widespread bank failures and recovered relatively quickly.
