Bank Indonesia’s Burden-Sharing Revives Debate on Independence

Bank Indonesia’s decision to enter into a renewed “burden sharing” agreement with the Finance Ministry has revived a long-standing debate about its independence.

BI is supporting growth by purchasing government bonds in the secondary market and sharing interest costs for programs related to public housing and cooperatives, it said in a statement on Thursday. Although the central bank pledged it would remain prudent and maintain market discipline in carrying out the scheme, the move still raised some questions among economists and market watchers.