March 28, 2018 / 4:45 AM / 25 days ago

Indonesia parliament body approves Perry Warjiyo as central bank governor

JAKARTA (Reuters) - An Indonesian parliamentary commission on Wednesday endorsed Perry Warjiyo to be central bank governor, making it very likely his appointment will be approved next week by the full legislature.

Nominee for governor of Bank Indonesia Perry Warjiyo gestures during a parliamentary hearing at the parliament building in Jakarta, Indonesia, March 28, 2018. REUTERS/Willy Kurniawan

Melchias Markus Mekeng, chairman of parliament’s financial commission, said Warjiyo, currently a Bank Indonesia (BI) deputy governor, is very experienced and “appropriate” for leading the central bank.

The chairman also urged Warjiyo to maintain stability of the rupiah currency.

Warjiyo, President Joko Widodo’s sole nominee for Bank Indonesia’s top position, told a four-hour hearing earlier in the day that the central bank can support both economic growth and financial stability at the same time.

At some past times, BI has said it had to put stability before growth when deciding monetary policy because a stable environment is needed for an economy to expand.

Nominee for governor of Bank Indonesia Perry Warjiyo gestures during a parliamentary hearing at the parliament building in Jakarta, Indonesia, March 28, 2018. REUTERS/Willy Kurniawan

“The government and many other people think BI should help to accelerate growth. I feel quite sure that maintaining stability and pursuing strong economic growth don’t have to be contradicted,” Warjiyo told parliament’s financial commission, which is conducting a “fit and proper test” to consider his nomination.

Warjiyo still needs further approval by parliament to secure his appointment. The full parliament is scheduled to meet next week to consider the appointment, said Mekeng said.

In recent years, Indonesia’s annual economic growth rate has remained about 5 percent, occasionally prompting calls for BI to keep lowering its benchmark rate IDCBRR=ECI. The rate was lowered 200 basis points in 2016 and 2017, but at present there is no room for easing.

Nominee for governor of Bank Indonesia Perry Warjiyo waits for a parliamentary hearing at the parliament building in Jakarta, Indonesia, March 28, 2018. REUTERS/Willy Kurniawan

GLOBAL RISKS

Last week, the central bank held the benchmark for a sixth consecutive meeting, saying the current level is sufficient to maintain stability and support growth.

In 2017, Southeast Asia’s largest economy grew 5.07 percent. Although that was the fastest pace in four years, the growth rate was near the lower end of BI’s 5.0-5.4 percent projection.

Warjiyo said on Wednesday that Indonesia will likely grow 5.2-5.3 percent in 2018. BI has forecast a 5.1-5.5 percent range.

He noted several global risks that could complicate efforts to maintain stability, including plans by the Federal Reserve to further raise United States interest rates this year, protectionist policies by some governments and fluctuating oil prices.

The 59-year-old Warjiyo has a doctorate in monetary and international economics from Iowa State University.

If the nomination is approved by parliament as expected, Warjiyo will succeed Agus Martowardojo, whose five-year term is due to end in May.

Reporting by Maikel Jefriando; Additional reporting by Tabita Diela and Gayatri Suroyo; Editing by Richard Borsuk

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