Policy normalization will be done at appropriate time: BI

Policy normalization will be done at appropriate time: BI

Senior Deputy Governor of Bank Indonesia (BI), Destry Damayanti, speaking at an online event held to launch the Financial System Stability Review Book on Friday (May 13, 2022). (ANTARA/Sanya Dinda/FR)

Jakarta (ANTARA) - Bank Indonesia (BI) will carry out policy normalization or the exit strategy at the appropriate time, Senior Deputy Governor of BI, Destry Damayanti, said on Friday.

"Premature policy normalization will be very risky for economic recovery and the financial sector. However, if it is done too late, it could also cause faster macro risk acceleration," she explained at an online event held to launch the Financial System Stability Review Book.

However, Bank Indonesia, along with the government and related authorities, will continue to maintain the momentum of economic recovery by bolstering synergy within the national policy mix framework.

"From the fiscal standpoint, the importance of policy support for economic recovery will be strengthened by the state budget's strategic role as a shock absorber in maintaining the economic wheel and purchasing power, especially of the most vulnerable groups," Damayanti said.

Meanwhile, in the financial sector, the government's support can be seen from several policies, including credit restructuring, which has significantly benefited the people.

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"Through the measured policy mix, Bank Indonesia will take normalization policy, which is expected to not halt economic recovery," Damayanti said.

To encourage economic recovery, Bank Indonesia is also bolstering government policies.

An example of this is the provision of incentives in the form of the Giro Reserve Requirements (GWM) relaxation for banks channeling credit to micro, small, and medium enterprises (MSMEs) and priority sectors.

Incentives are also being provided to banks relaxing the Loan to Value (LTV) ratio.

"BI will also continue to strengthen the prime lending rate transparency policy to encourage credit fee intermediation and efficiency for the business world," she informed.

During the event, BI Governor Perry Warjiyo unveiled the Financial System Stability Review Book No. 38, March 2022 edition, themed “Synergy and Innovation to Expedite Intermediation Recovery and Maintain Financial System Resiliency.” 

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