Indonesia central bank governor Perry Warjiyo resigns, Destry Damayanti appointed interim, government urges calm amid investor concerns over independence.
JAKARTA: Indonesia’s central bank governor Perry Warjiyo stepped down on Monday, a surprise move that analysts said could rattle investors worried about the bank’s independence, prompting the government to call for calm.
Senior deputy governor Destry Damayanti was appointed interim governor after President Prabowo Subianto accepted Warjiyo’s resignation, State Secretariat Minister Prasetyo Hadi told reporters.
Destry, who pledged continuity, said Warjiyo submitted his resignation on Saturday for personal reasons.
The rupiah weakened as much as 0.36% to 18,000 to the dollar following the announcement, while the main stock index seesawed.
“What must now be anticipated after Perry’s resignation is the weakening of Bank Indonesia’s independence,” said Bhima Yudhistira Adhinegara, executive director of Center of Economic and Law Studies. “Restoring investor confidence will certainly not be easy, especially since the direction of monetary policy is under executive control. As long as the political pressure on BI continues, Perry’s internal replacement will not last long.”
Prasetyo declined to elaborate on Warjiyo’s personal reasons. Warjiyo, who started his BI career in 1984, was first appointed governor in 2018 and reappointed for a second five-year term in 2023.
“A lot will depend on who takes over, with Destry, a senior deputy governor, stepping in initially. If Prabowo’s nephew (Thomas Djiwandono), as a deputy governor steps in, the market will regard this with suspicion, given this is a crucial technocratic post and BI should remain independent,” said Angus Mackintosh, ASEAN specialist at Aletheia Capital in Singapore.
The appointment of a new governor involves the president and parliament, with the president submitting a nomination for a “fit and proper test”. Prasetyo said: “The president has not yet proposed the nomination.”
The government said the appointment process would be carried out transparently and accountably and would not disrupt monetary policy or economic stability.
Destry said BI “will always ensure the continuity of its duties and authorities” to maintain stability of the rupiah and financial system.
Rating agencies Moody’s and Fitch had cut Indonesia’s credit rating outlook to “negative” earlier this year citing concerns about changes in BI’s mandate, while S&P kept its outlook “stable”. All three rate Indonesia’s debt at the second-to-lowest investment grade.
BI surprised markets last week by keeping policy rates unchanged and offering incentives to attract foreign capital to support the rupiah, after raising rates by 100 basis points since May.
