Policy standardization will be done at the appropriate time: BI

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Jakarta (ANTARA) – Bank Indonesia (BI) will proceed with policy normalization or exit strategy at the appropriate time, BI Senior Deputy Governor Destry Damayanti said on Friday.

“A premature normalization of policies will be very risky for the economic recovery and the financial sector. However, if carried out too late, it could also lead to a faster acceleration of macro risk,” she explained during a online event organized to launch the Financial System Stability Review Book.

However, Bank Indonesia, together with the government and relevant authorities, will continue to sustain the momentum of economic recovery by enhancing synergy within the national policy mix.

“From a budgetary point of view, the importance of political support for economic recovery will be reinforced by the strategic role of the state budget as a shock absorber in maintaining the economic wheel and purchasing power, in particular most vulnerable groups,” said Damayanti.

Meanwhile, in the financial sector, government support is reflected in several policies, including credit restructuring, which has greatly benefited the people.

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“Through the measured policy mix, Bank Indonesia will adopt a policy of normalization, which is unlikely to stop the economic recovery,” Damayanti said.

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

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

Incentives are also provided to banks to relax the loan-to-value (LTV) ratio.

“BI will also continue to strengthen the prime rate transparency policy to encourage credit fee intermediation and efficiency for the business community,” she said.

During the event, BI Governor Perry Warjiyo unveiled the Financial System Stability Review Book N° 38, March 2022 edition, on the theme “Synergy and innovation to accelerate the recovery of intermediation and maintain the resilience of the financial system”.

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