JAKARTA,El Sky News – Indonesia’s financial sovereignty is facing a “red alert” following the official inauguration of Thomas Djiwandono as the Deputy Governor of Bank Indonesia (BI). While the former Deputy Finance Minister pledged to uphold the central bank’s independence, top economists and market analysts are calling the move a “death knell” for the separation of powers between political ambition and monetary stability in Southeast Asia’s largest economy.
The “Fiscal Takeover” of Indonesia’s Monetary Policy
The appointment of Djiwandono—who is not only a former government official but also the nephew of President-elect Prabowo Subianto—has ignited a firestorm of criticism. Analysts warn that the “Great Wall” designed to protect Indonesia’s central bank from political interference has effectively been breached.
The primary concern is “Fiscal Dominance”: a dangerous economic state where the central bank is forced to suppress interest rates or print money to fund government deficits. With a “palace insider” now holding the reins at BI, the market fears that the bank will transition from an objective inflation watchdog into a “financial ATM” for the administration’s high-cost campaign promises.
Economists Sound the Alarm: “A Post-Reform Low”
The backlash from the academic and economic community has been swift and unforgiving. Bhima Yudhistira, Executive Director of CELIOS, described the appointment as a “regressive step” that undoes decades of institutional strengthening since Indonesia’s 1998 Reformasi.
“This is a dangerous signal for Indonesia. The fiscal sector is already under political control; now the monetary sector is being ‘annexed.’ If the central bank loses its teeth to challenge the government, global investor confidence will evaporate,” Yudhistira warned.
Nailul Huda, also from CELIOS, highlighted the blatant conflict of interest regarding Djiwandono’s background as a high-ranking official of the Gerindra Party. His assessment was even more grim: “When Indonesia’s fiscal sector is compromised and the monetary sector follows, an economic crisis is no longer a possibility—it becomes an inevitability.”
Market Hemorrhage: The Rupiah and IHSG React
The “fear factor” is already visible in real-time economic indicators. Investors are clearly voting with their feet:
- Currency Under Pressure: The Indonesian Rupiah plummeted toward the Rp16,900 per USD mark immediately following the news, a clear sign of skepticism from global currency traders.
- Stock Market Slump: The Jakarta Composite Index (IHSG) buckled under the pressure, sliding below the 9,000 psychological threshold to 8,921, as fund managers reassess the risk of political meddling in interest rate decisions.
Conclusion: Independence in Name Only?
While Djiwandono insists he has resigned from his political posts, the consensus among critics is that independence is a matter of perception, not just paperwork. By placing a family member and political loyalist in the heart of Indonesia’s central bank, the government has sent a message that political loyalty now outweighs technocratic neutrality.
As Indonesia enters a new political era, the question remains: Will Bank Indonesia remain the guardian of the people’s purchasing power, or has it officially become a tool of the state? ( Rahul Rezky )
