BI wants to participate on Fiscal

In this morning I had a disposition (duty from my boss) about that I should criticize an MOU draft (Memory of Understanding) between BI and Bappenas proposed by BI about Cooperation in External Debt Management.

BI offers 4 main fields of cooperation where BI and Bappenas are going to:

1. make coordination in improving the effectivity of external debt management. The activities are: (i) to plan projects funded by foreign loans; (ii) to draft a borrowing strategy (the planning document that contains the needs and planned utilization of external loans, encompassing the planned annual magnitude and development priorities that are funded by external loans in medium term framework - 5 years); (iii) to monitor the disbursement of on going projects funded by foreign loan.
2. do joint research in term of foreign loan, investment, and improvement of regional economic.
3. exchange of information and monitor the management of external loan
4. assign officers exchange.

I think BI is overconfidence. I think it's okay for point number 2, 3, and 4, but I have some words for point number 1. I don't want to go to a game theory how fiscal and monetary act and react. Just thinking simple.

BI uses the term of coordination, but the impact is no longer jus coordination. Ok, you can mention a participation in decision making.

We know that BI has a special duty on monetary policy independently. They have some instruments such as SBI (central bank rate), reserves, and money supply. They can manage them to keep monetary stabilizing. Remember taht nature of monetary policy is stabilization.

On the other hand, fiscal policy belongs to Government (coordinate by Ministry of Finance and Bappenas). Deficit, a part of state budget, including debt management, is one of fiscal policy instruments. If GoI wants to accelarate growth, GoI will manage budget optimally to pursue the target, and debt is one of the instruments.

My sugestion is, yes for point number 2, 3, and 4, but not at all for point number 1.