Indonesia central bank bond law raises independence concerns

Fears arise that government could arbitrarily declare crisis to monetize debt

20230103N Bank Indonesia

Bank Indonesia Gov. Perry Warjiyo speaks to central bank stakeholders at an annual meeting in November. © Reuters

KOYA JIBIKI, Nikkei staff writer

JAKARTA -- Recent legislation allowing Indonesia's central bank to buy bonds directly from the government in a crisis is raising concerns about the damage it could deal to central bank independence and fiscal discipline.

The Development and Strengthening of Financial Sector bill passed last month permanently enshrines into law an emergency measure taken in 2020 as the country was grappling with the coronavirus pandemic.

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