Jakarta. Perry Warjiyo's resignation has shifted attention from who will lead Bank Indonesia next to whether the central bank can preserve its independence, with economists warning that the Financial Sector Development and Strengthening Law (P2SK) has blurred the line between monetary policy and politics.

Liza Camelia Suryanata, Head of Research at Kiwoom Sekuritas Indonesia, said Perry's resignation should not be interpreted as proof of political interference, but argued that the P2SK Law has increased the risk of political influence over the central bank.

"Perry's resignation should not immediately be considered proof of political intervention," Liza said on Monday. "But in my view, the P2SK Law has made the barriers between Bank Indonesia, the government, and Parliament much thinner."

Liza said Bank Indonesia remains independent de jure, as the law still guarantees its autonomy and requires it to reject outside interference. The greater concern, however, is whether that independence can still be maintained in practice.

"What we need to monitor now is de facto independence, how that autonomy is actually exercised," she said.

Since the P2SK Law took effect, BI’s mandate has expanded beyond safeguarding the rupiah to supporting payment system stability, financial system stability, real-sector growth, and even job creation.

"Those objectives may sound positive, but they also create greater room for pressure on the central bank to lower interest rates or loosen liquidity to support growth, even when conditions for the rupiah, inflation, or external stability may not justify it," Liza said.

She also highlighted the participation of government ministers in Bank Indonesia's monthly Board of Governors meetings, where monetary policy is discussed.

"Ministers only have speaking rights and no voting power. But political influence does not always come through formal instructions or votes," she said.

According to Liza, Parliament now also holds greater leverage over the central bank because Bank Indonesia's operational budget, spending standards, organizational structure, human resources, and remuneration require legislative approval, while recommendations from parliamentary evaluations must be followed up.

Although lawmakers cannot dismiss the governor simply because they disagree with monetary policy decisions, she said such institutional oversight could still become a powerful source of pressure.

"I would not immediately conclude that Perry Warjiyo resigned because of the implementation of the P2SK Law," Liza said. "But the law has created an institutional setting where political influence over Bank Indonesia can enter more easily, become broader in scope, and at the same time be much harder to prove."

She added that while Bank Indonesia may still be legally independent, its practical autonomy increasingly depends on whether members of the Board of Governors are willing to stand up to pressure from both the government and Parliament.

Markets Watching the Succession
Liza warned that markets could become more anxious if Deputy Governor Thomas Djiwandono is appointed governor ahead of Senior Deputy Governor Destry Damayanti, whom she described as the institution's most natural choice to lead the transition.

Thomas only joined the Board of Governors a few months ago, and a rapid promotion could make investors question whether the succession reflects institutional continuity, she said.

"The appointment may be legally valid if proposed by the president and approved by Parliament," Liza said. "But legality does not automatically translate into credibility."

She said Thomas' family ties to President Prabowo Subianto, his limited experience at the central bank, and the possibility of bypassing Destry could fuel perceptions that the relationship between the government and Bank Indonesia is shifting from policy coordination toward political control.

Liza also cautioned against the risk of fiscal dominance, where monetary policy gradually becomes aligned with the government's financing needs rather than its primary mandate of maintaining price and financial stability.

If that happens, she said, monetary decisions could increasingly be influenced by efforts to lower government borrowing costs, support state programs, accelerate economic growth, or finance fiscal spending, instead of focusing on inflation, the rupiah, and external stability.

"Without strong communication and convincing evidence that Bank Indonesia remains independent, markets could respond through a weaker rupiah, higher government bond yields, rising risk premiums, and concerns that future interest-rate decisions or currency stabilization measures are being driven more by political pressure than monetary considerations," she said.

Separately, Achmad Nur Hidayat, an economist and public policy expert at Veteran Jakarta University, said the government should quickly clarify the reasons behind Perry's resignation to prevent speculation from taking hold in financial markets.

"In financial markets, information vacuums are quickly filled by speculation, and speculation surrounding central bank leadership can spread faster than the government's ability to provide explanations," Achmad said.

He said the impact of Perry's resignation will depend not only on who succeeds him, but also on how the government and Parliament manage the leadership transition.

"Perry Warjiyo's resignation can remain a well-managed institutional transition, but it could also evolve into a crisis of confidence," Achmad said. "The difference lies in transparency, procedural certainty, and credible assurances that Bank Indonesia will not become an extension of the government's fiscal interests."

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