Bank Indonesia Concocts 5 'Jamu' for 2024 with Focus on Strengthening Local Currency

TEMPO.CO, Jakarta - Bank Indonesia has prepared a design for its 2024 policies. Perry Warjiyo, the central bank's governor, said that BI has concocted five "jamu" to help improve the health of Indonesia's economy, starting with monetary policy, macroprudential, payment systems, money market penetration, as well as achieving an inclusive and green financial economy.

"What we want is to have all five "jamu" to be sweet, but please be patient. What's clear is that macroprudential, payment system, money market deepening, and inclusive money economy, will all be sweet policies. In fact, we will keep adding more sweet policies," Perry said in a discussion on 'Monetary Stability amidst Economic Dynamics 2024' on Thursday, February 1, posted to the YouTube channel of Infobank TV.

For monetary policy, Perry said that it would still be focused on prosperity, but he asked the public to have patience. He said that BI is still keeping its benchmark interest rate at six percent because the central banks want to focus on stabilizing and strengthening the rupiah first. 

There are five important points in BI's monetary policy. First, pushing interest rates to reach the inflation target of 2.5 percent ± 1 percent in 2024 and 2025. Second, stabilizing the rupiah exchange rate. The third is optimizing Bank Indonesia Rupiah Securities (SRBI), and issuing the Bank Indonesia Foreign Currency Securities (SVBI) as well as BI Foreign Currency Sukuk in a bid to penetrate the money market.

The fourth is to increase foreign exchange reserves and expand foreign exchange proceeds from natural resource exports, and the last is to establish coordination to control inflation.

For macroprudential policy, the central bank will ease the ratio of loan to value/financing to the value of property credit/financing. BI will also provide liquidity incentive policies, easing liquidity, and strengthening systemic surveillance of credit/financing distribution and banking resilience.

"We will provide an incentive of Rp165 trillion for liquidity, we will keep it going and move it around to sectors that need encouragement," Perry said.

For the payment system, BI has prepared four policies. Starting from increasing the effectiveness of QRIS, the effectiveness of Indonesian credit cards for the government segment, developing retail payment systems, to expanding international cooperation for the QRIS and BI Fast payment systems.

Annisa Febiola

Editor's Choice: Rupiah Climbs against Dollar amidst Market Optimism over Indonesia's Economy

Click here to get the latest news updates from Tempo on Google News