Governor Sabirin has refused to step down

The head of Indonesia's central bank - who has already been threatened with prosecution over an $80m political slush fund - is back at work but again under fire, this time over counterfeiting claims.

The co-ordinating minister for the economy Rizal Ramli was quoted in a leading newspaper as saying that Bank Indonesia Governor Sjahril Sabrin should be investigated again over allegations that members of the central bank had counterfeited money.

"As the series numbers of the counterfeit notes are the same numbers printed in legally distributed money, then someone must be responsible for the case morally and professionally," Mr Ramli said.

In July the bank sacked five employees in Bandung, West Java, on suspicion of counterfeiting 36m rupiah ($3,500).

But Governor Sjahril Sabirin says the accusations are politically motivated.

And he insists that under the terms of a law introduced by the previous government of B.J. Habibie, the central bank was legally independent of government and Parliament and he cannot be removed.

"How does he know about counterfeit money? Why does it become so easy now to allege criminal actions against someone?" he said.

Bank Bali scandal

Mr Sabirin had resumed his duties as central bank governor on Wednesday after being released from house arrest over suspicion of involvement in the Bank Bali scandal.

Basic foods have become more expensive for the poor

The allegation was that he was involved in diverting $70m in funds intended for the reconstruction of the failing institution into the election campaign of Mr Habibie, who lost to Abdurrahman Wahid in 1999.

Mr Sabirin denies involvement in the scandal, which has also paralysed attempts to recapitalise Indonesia's failing banking sector.

It is alleged by Mr Ramli that more than half of the $16bn in credits provided by Western governments and international institutions to save the banking system went missing in l997 and l998.

Mr Wahid had hoped to put his own man in charge of the central bank, naming Harvard-educated banker Answar Nasution as acting governor.

But attempts to gain backing for Mr Nasution stalled in the Indonesian Parliament, where rival parties seem intent on naming one of their own members as new central bank governor.

Last month Mr Nasution and four deputy bank governors resigned, citing lack of political support.

Mr Wahid says the government will still eventually bring court proceedings against Mr Sabirin.

Economic problems

The political wrangling has taken its toll on Indonesia's hopes of economic recovery.

The country's currency, the rupiah, trades at 9,500 to the dollar - near the level at the height of the Asian crisis two years ago, while the currencies of most of the other countries affected by the crisis have recovered sharply.

That makes it more difficult for ordinary Indonesians, who depend on expensive imported rice.

And it makes investors - who would have lost 80% of the value of their pre-1997 investments - nervous about putting more money into the country.

Western governments have also lent billions of dollars to Indonesia in the hope of reviving the economy, and much of that debt has had to be rescheduled.

On Friday, the US agreed to reschedule the paying back of $465m of debt, which had been due to be repaid in the next two years.