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Indonesian panel approves Warjiyo to be central bank chief

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Mr Warjiyo has said that the central bank can support both economic growth and financial stability at the same time.

Jakarta

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.

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

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

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Mr 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.

"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," Mr Warjiyo told parliament's financial commission, which is conducting a "fit and proper test" to consider his nomination.

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

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

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, South-east Asia's largest economy grew 5.07 per cent.

Although that was the fastest pace in four years, the growth rate was near the lower end of BI's 5.0-5.4 per cent projection.

Mr Warjiyo said on Wednesday that Indonesia will likely grow 5.2-5.3 per cent in 2018. BI has forecast a 5.1-5.5 per cent 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, Mr Warjiyo will succeed Agus Martowardojo, whose five-year term is due to end in May. REUTERS