Perry’s resignation revives questions over BI independence

Bank Indonesia (BI) Governor Perry Warjiyo has resigned, becoming the latest senior fiscal and monetary policymaker to leave office over the past year. After more than four decades helming the central bank, his decision to step down in the middle of his second term comes at a time of heightened global economic uncertainty, mounting domestic fiscal pressures and weakening market confidence. Perry’s departure has reignited debate over the central bank’s independence amid growing state policy priorities.

Selecting a credible successor will be critical to restoring market confidence and reaffirming the central bank’s autonomy. Following Perry’s resignation, the central bank’s senior deputy governor Destry Damayanti was appointed acting governor. She is also among the names being discussed as his potential permanent successor alongside Finance Minister Purbaya Yudhi Sadewa, BI Deputy Governor Aida S. Budiman, former BI governor Burhanuddin Abdullah, former Financial Services Authority (OJK) chief commissioner Muliaman D. Hadad and BI Deputy Governor Thomas Djiwandono.

Joining the central bank in 1984, Perry was first appointed BI governor in 2018 and then reappointed for the 2023-2028 term. Under his leadership, BI navigated a series of major economic shocks, including the taper tantrum, the COVID-19 pandemic and its aftermath and heightened geopolitical tensions in the Middle East. The central bank also expanded its policy toolkit by introducing foreign exchange (forex) open market operations alongside new instruments such as BI Rupiah Securities (SRBI) and BI Foreign Exchange Securities (SVBI).

Pressure on the rupiah intensified at the beginning of 2026. The currency's continued weakness in turn heightened political pressure on Perry. During a meeting in May involving several ministers and members of the Financial System Stability Committee (KSSK), President Prabowo Subianto reportedly expressed frustration over the rupiah's performance.

Meanwhile, tensions emerged between BI and Finance Minister Purbaya Yudhi Sadewa over the placement of the government's accumulated budget surplus (SAL). Since September 2025, part of the approximately Rp 281 trillion SAL had been deposited in state-owned banks to support lending and stimulate economic growth. Perry reportedly requested that the funds be returned to the government's account at BI, as banking liquidity was already adequate. Purbaya opposed the proposal, citing concerns that withdrawing the funds could disrupt banking liquidity and undermine one of his flagship economic policies.

Broader concerns over BI’s independence also grew as the government became more directly involved in the central bank’s leadership. Former deputy finance minister Thomas Djiwandono, Prabowo’s nephew, was appointed BI deputy governor to replace Juda Agung, who took over the post Thomas had vacated.

Exchanging the figures in these senior positions fueled a perception that the administration was seeking greater influence over BI, at a time the central bank was facing increasing fiscal constraints in financing the government’s priority programs.

Legislative changes have further intensified the debate over BI’s autonomy. Law No. 4/2026 on financial sector development and strengthening (P2SK) grants the House the authority to evaluate the performance of the BI governor. Although the provision does not provide a direct legal basis for dismissal, it has raised concerns among investors and market participants about the central bank’s independence.

At the same time, the P2SK Law formally assigns BI the dual mandate of maintaining price stability while supporting economic growth. While such dual mandates are common for central banks, uncertainty over how to resolve potential conflicts between the two objectives has raised questions about whether price stability could become subordinate to growth considerations.