JAKARTA: Indonesia's finance minister said on Friday that the government will inject another 200 trillion rupiah ($11.15 billion) of liquidity into state lenders in order to boost credit, using its excess cash reserves deposited in Bank Indonesia (BI).
Below are the details:
* The additional liquidity will bring total government injections into state banks to 400 trillion rupiah, with some to remain until the end of December 2026.
* Some of the liquidity will be placed in the state banks over a short-term period and some until the end of the year, Finance Minister Yudhi Sadewa Purbaya told a press briefing.
* The decision was taken after the minister held a meeting on Friday with the chiefs of five state-owned banks: Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, Bank Syariah Indonesia and Bank Tabungan Negara.
* Without the additional liquidity, the national credit growth would slow down to below the double-digit growth of 11.51% recorded in May, Purbaya said, based on the minister's discussions with the banks' chief executives.
* With the injection, Purbaya said national credit growth could reach 14% to 15% this year.
* The move reversed an earlier agreement between the ministry and BI that the government would return the initial injection of 200 trillion rupiah back into its deposit in the central bank.
* Asked whether the new liquidity could hinder the country's efforts to stabilise the rupiah, Purbaya said President Prabowo Subianto had approved the plan and wants the economy to keep running.
* "If the economy slows down, investors will pull out. If we turn the economy around and (get it) running again, we know people tend to invest in a growing economy, so the rupiah will strengthen again," Purbaya said. - Reuters
