Suharto Fires Central Bank Governor
Suharto Fires Central Bank Governor
Feb. 17, 1998
JAKARTA, Indonesia (AP) _ President Suharto fired the country's Central Bank chief Tuesday amid growing unrest over Indonesia's economic crisis and a growing dispute over how to handle it.
Soedradjad Djiwandono, a key player in negotiating a $40 billion rescue package with the International Monetary Fund, is believed to have opposed recent government economic decisions, including its proposal for stabilizing the nation's sinking currency. He also angered some Suharto relatives by closing their insolvent banks.
Soedradjad's dismissal came as Suharto faced mounting international criticism over the plan to peg the rupiah to the U.S. dollar through a currency board.
The rupiah lost 80 percent of its value against the U.S. dollar over eight months, hitting its lowest point in January, sending inflation and unemployment soaring and angering many of Indonesia's poor.
Thousands have rioted in more than a dozen towns over the past few days. Five people died in the violence.
Sjahril Sabirin, a director of Bank Indonesia, which is responsible for state monetary policy, was named the new bank chief. He has come out publicly in favor of the currency board.
A decree signed by Suharto, dated Feb. 11 but announced Tuesday, ended Soedradjad's term three weeks ahead of presidential elections. Suharto, in power for 32 years, is almost certain to win.
Normally, the Central Bank governor's term would have been reviewed with other senior appointments after the election, when a new Cabinet is announced.
Indonesia's Central Bank received glowing reports from outside observers when the economy boomed. But that changed dramatically when the rupiah began its slide in value in July, along with several other Southeast Asian currencies.
Critics claim the bank under Soedradjad floundered as the drop accelerated and wiped out years of economic progress for the world's fourth-most populous nation.
Soedradjad was a key player in negotiations with the International Monetary Fund for a $40 billion economic bailout package that demanded sweeping reforms.
The IMF package, agreed to in November, had to be renegotiated in January when the rupiah slid dramatically on concerns that Suharto's government was not following through with reforms, including some that hurt his family's business interests.
Soedradjad was respected within financial circles. But he raised the ire of Suharto's second son Bambang and his half-brother Probosutedjo when he ordered their commercial banks closed down along with 14 others deemed insolvent.
Suharto's currency board plan has prompted warnings from the IMF that it could doom the country's chances of economic recovery. IMF Managing Director Michel Camdessus said Monday the bailout will be jeopardized if the proposal goes ahead.
Officials in the United States and other nations have also questioned the plan.
Meanwhile, violence has built over the economic hardships. Mobs, angered by rising food prices, went on a rampage on four islands in recent days, looting and burning dozens of mainly Chinese-owned shops.
The Chinese, who dominate commerce, complain they are being made scapegoats for economic problems beyond their control.
On Tuesday, several hundred people ransacked a store in Muaraenim, 270 miles northwest of Jakarta, throwing food and other merchandise into the street.
Soedradjad is the fourth Central Bank official to be dismissed in less than three months. Three others were fired in December and are now being investigated for alleged corruption and misuse of public funds.