IMF-WB -- OJK strengthens coordination to face global pressure

IMF-WB -- OJK strengthens coordination to face global pressure

OJK Board of Commissioners Chairman Wimboh Santoso

Nusa Dua, Bali, (ANTARA News) - The Financial Services Authority (OJK) has ensured that it will continue to improve coordination and communication with the Government and Bank Indonesia (BI) in the face of global economic pressure.

"The government, BI, and OJK have issued short- and medium-term policy mixes and continue to monitor economic developments," OJK Board of Commissioners Chairman Wimboh Santoso remarked during a discussion on "Navigating Indonesia`s Economy in The Global Uncertainties" here on Wednesday.

Santoso highlighted the need for the financial services sector to be prepared to face the global economic movement, as the hike in the US Federal Reserve`s (The Fed`s) interest rate could potentially be followed by an increase in the domestic interest rates.

"Banks and finance companies need to exert extra effort to ensure efficiency. This will reduce the impact of the rising loan interest rates that are needed to support economic growth," he explained.

He noted that the OJK will also promote financial market deepening by increasing the supply side from the demand side and preparing infrastructure support.

"We have established a national strategy for financial market deepening. I hope that our financial market will grow strongly and reduce dependence on foreign capital flows," he stated.

At present, the condition of the financial services industry is solid, supported by strong capital data, good liquidity, and a controlled level of risk.

This is apparent from the maintained capital adequacy ratio of banks of 23 percent and the level of capital of insurance companies that are above the threshold.

"Banking liquidity is also in sufficient condition, and banking `excess reserve` reaches around Rp588 trillion. This provides enough `buffer` for the financial services sector in the face of pressure," Santoso remarked.

In addition, the intermediation of the financial services sector showed an upward trend, with bank credit growth recorded at 12.12 percent year-on-year, with non-performing loan rates of 2.74 percent.

The growth of receivables from finance companies was well recorded, which grew by 5.82 percent, with NPF amounting to 3.11 percent.

"We will continue to monitor and evaluate the development of credit risks of both banks and finance companies to prevent a crisis in the financial services sector," Wimboh remarked.

Reporting by Satyagraha
Editing by Otniel, Eliswan