Indonesia parliament drops controversial plan to revise central bank act

JAKARTA: The Indonesian parliament's legislative committee (Baleg) has shelved a plan to revise the act covering the central bank and lawmakers will instead debate an alternative bill on the financial sector, its chairman said late on Thursday.

The plan to revise the 1999 law had raised concerns about undermining Bank Indonesia's (BI) independence and potentially prolonging debt monetisation, which BI undertook last year to support an economy hit by the coronavirus pandemic.

The plan had been taken off parliament's 2021 list of priority legislation in a meeting on Thursday night, according to Baleg chairman Supratman Andi Agtas.

In December, Supratman told Reuters the majority of parties in Baleg had already voted for the plan to be dropped.

The financial bill that lawmakers will deliberate on in 2021 was one drafted by some members of parliament's financial committee alongside the government and submitted for review in November.

The bill also has provisions to revise some of BI's role, such as expanding its mandate to include economic growth and allowing fiscal deficit financing under certain conditions, but explicitly states that policymaking will remain independent.

Baleg's decision must be approved in a parliamentary plenary session, but its endorsement is usually passed.