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Indonesia's newly appointed Finance Minister Purbaya said that the government plans to inject about 20 trillion Indonesian rupiah (approximately 15.6 billion Singapore dollars) into the national economy to promote growth. This is the first major measure he announced after taking office as a new official.
After attending the parliamentary working meeting on Wednesday (September 10th), he said that the government will withdraw some funds from the 400 trillion Indonesian rupiah cash reserves stored in the Indonesian central bank and invest them in the financial system, including depositing funds in state-owned banks to stimulate loans and other ways to flow back into the market, so that funds can flow and the economy can resume operation.
He emphasized, "My job is to make the currency and fiscal engines run at full speed
After the announcement, the Indonesian rupiah closed up 0.1% on Wednesday, and the benchmark stock index rose 0.9%, reversing three consecutive days of decline.
Earlier this year, the Indonesian Ministry of Finance allocated a cash buffer of 16 trillion Indonesian rupiahs to help state-owned banks provide low interest loans to rural cooperatives, while also allocating some funds for the construction of affordable housing. The Ministry of Finance has also sought the help of the central bank to bear the debt costs of these two projects through a new sharing mechanism.
On Tuesday (9th), Pulbaya succeeded Mu Yanni as the Finance Minister. He promised to promote economic growth of over 6% in the "near future" to gradually achieve the 8% target set by President Prabowo.
He said that despite the recent interest rate cuts by the central bank, slow growth in government spending and money supply has led to economic weakness, and the financial system is experiencing a 'drought'.
To stimulate spending, Purbaya said that the Ministry of Finance will monitor budget execution more frequently, especially for large funding projects such as the free nutritious meal program.
Since September last year, the Indonesian central bank has cumulatively lowered benchmark interest rates by 125 basis points, while reducing the issuance and yield of Indonesian rupiah securities to release more liquidity. |
