"Several years ahead will not be easy and in view of that the banking sector`s prudence will be a very crucial thing," Finance Minister Chatib Basri said.
Jakarta (ANTARA News) - Indonesian Finance Minister Chatib Basri called on banks in the country to remain prudent as part of efforts to anticipate global economic fluctuations that are predicted to still overshadow the industry in the next few years time.

"Several years ahead will not be easy and in view of that the banking sectors prudence will be a very crucial thing," he said when speaking at an international seminar here on Tuesday.

He said as one of the developing countries Indonesia is vulnerable to any global economic policy change especially normalization of the Feds monetary easing policy that would be started this year.

He said the US central banks policy had the potential to cause capital outflow.

The banking sector as one of the sectors that contributes the most to the countrys economic growth, Chatib said it must be more prudent in carrying out its business.

He said he believed the Indonesian central bank would play a big role with policies aimed at directing the banking sector to be more aware of tight liquidity challenge ahead.

"The Bank Indonesia rate is at present set at 7.5 percent but we have seen large banks have imposed up to 11 percent interest rates. BIs policy response to it would play a very important role," he said.

The minister said economic stability in the country would be a must for investors to remain confident to invest in Indonesia.

Other preparations that could be done meet global challenges would be tightening the fiscal sector, he added.

"Fiscal tightening might be continued and we believed it would help reduce the budget deficit," he said.

Chatib said option to raise the price of subsidized fuel oils should be taken.

He said that basically raising the price of subsidized fuel oils would not be for reducing the budget deficit but for allocating the subsidy which had been considered incorrect.

"The fuel subsidy should have been used for productive sectors," he said.(*)

Editor: Heru Purwanto
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