Perry Warjiyo resigned as governor of Bank Indonesia, and the announcement landed with the kind of shock that only comes when a central bank’s supposed distance from power starts looking like a stage prop. State Secretariat Minister Prasetyo Hadi told a press conference that, “As of yesterday, we officially received a letter of resignation from the Governor of BI to the President,” and that “The president accepted Perry Warjiyo’s resignation and conveyed his utmost gratitude for his dedication in leading Bank Indonesia for seven years.”
The resignation has raised fresh questions about Bank Indonesia’s independence, because the handoff runs straight through the presidency and parliament. Perry, who began his career at BI in 1984 and has served as governor since 2018, did not meet President Prabowo Subianto directly before submitting his resignation, Prasetyo said. He cited only “personal reasons” for stepping down. That’s the official line. The machinery behind it is less graceful.
Who Holds the Levers
Senior Deputy Governor Destry Damayanti, a former chief economist at Bank Mandiri, will serve as acting governor until a replacement governor is elected. The replacement will come from a list of three candidates proposed by Prabowo, sent to parliament for a “fit and proper test,” after which legislators will select one of the candidates. So much for the myth of insulation. The executive proposes, parliament screens, and the state keeps the whole process inside its own walls.
Channel News Asia reported that the majority of Perry’s five deputies are long-time central bankers with at least 30 years of experience working for Bank Indonesia. One exception stands out: Thomas Djiwandono, 54, a former journalist, financial analyst, consultant, and politician for the Gerindra Party, who is a nephew of President Prabowo. Prabowo appointed Djiwandono as deputy finance minister in October 2024 and then nominated him as BI deputy governor in February of this year, prompting concerns about nepotism and political influence over BI. The central bank’s hierarchy may wear technical language, but the family ties and party links are plain enough.
Who Pays for the Instability
Markets reacted fast. The Jakarta Stock Exchange Composite Index fell 0.5 per cent, and the rupiah slumped from around 17,935 to the U.S. dollar to 18,009 by the close of trading yesterday. The currency had passed the psychological threshold of 18,000 rupiah to the U.S. dollar in June and is now trading at a lower level than at any time since the Asian Financial Crisis of 1997-1998. The people who live with the consequences don’t get a seat at the table when these decisions are made. They get the bill.
Perry’s departure comes as Indonesia faces pressure from Prabowo’s economic policy, which aims for annual GDP growth of 8 percent for the rest of his term. That policy has included a multibillion-dollar free meal program, widened the fiscal deficit toward its legally mandated ceiling of 3 percent of GDP, and increased the state’s involvement in the Indonesian economy to maximize the country’s return from natural resources and international trade. The apparatus calls it strategy. Investors call it uncertainty. Ordinary people are left under the same top-down command structure either way.
The firing of respected Finance Minister Sri Mulyani Indrawati last September also unsettled investors. In March, Moody’s and Fitch announced ratings outlook downgrades for Indonesia, with Fitch citing the “increasing policy uncertainty and erosion of Indonesia’s policy mix consistency and credibility” and the “growing centralization of policymaking authority.” MSCI later threatened to downgrade Indonesia to “frontier market” status because of transparency concerns in its stock market, including the high concentration of ownership in certain companies and the limited “free float” of shares. MSCI will announce its verdict in November.
What They Call Stability
The government said the leadership transition would not disrupt monetary policy or economic stability, and Interim Governor Destry said the central bank would “always ensure the continuity of its duties.” That’s the language of managed calm, the kind institutions use when they want everyone to keep trusting the same hierarchy that just exposed its seams.
Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies, put the danger more bluntly. “What must now be anticipated after Perry’s resignation is the weakening of Bank Indonesia’s independence,” he said, adding, “Restoring investor confidence will certainly not be easy, especially since the direction of monetary policy is under executive control.” The quote lands where the official assurances don’t: at the point where monetary power sits under political command, and the public is expected to call that normal.