JAKARTA (TheInsiderStories) - Governor of Bank Indonesia (BI) Agus Martowardojo sees the Indonesian economic conditions in 2017 are still favorable but not as strong as 2010 and will growt in the range of 5.0 to 5.4 percent supported by strong domestic demand. BI also looked, credit of banking industry will rise 10 to 12 percent from, deposits 9 to 11 percent and deficit on the healthy level below 3 percent in 2017.
In medium term (2018 -2021) the economic growth will be higher in the range 5.9 to 6.3 percent, current account deficit (CA) decreased below 3 percent and inflation downward. For 2016, He estimated the economic growth will ended 5.0 percent, inflation in the range 3 to 3.2 percent from 2015 3.4 percent supported by policy consistency and decrease global inflation.
He believed, this potential could double the potential of natural resources and human resources which have previously managed.
Introduce GWM Averaging, optimize govt’s bond for monetary operation in 2017
Agus continued, to help the development of Indonesia economy, BI will introduce the primary reserve requirement (GWM) averaging system, optimization of government securities for monetary operations and monetary policy will also be maintained to keep the the exchange rate volatility and developing market deepening to increase the liquidity and financing capacity of banks to support economic activity.
BI consider to set up the GWM averaging rate in one week or two weeks period starting second half of 2017.
So far, the bank must meet the primary reserve requirement ratio by 6.5 percent each time since March 2016. Now, with the GWM Averaging makes the bank does not have to maintain their primary reserve requirement ratio remained the same, or 6.5 percent on a daily basis.
Agus continued, BI also keen to reduce reliance on central bank certificates (SBI) that is used by the central bank to manage its monetary operations over the years. BI wants to take a greater role by optimizing the use of government securities as a monetary instrument gradually to replace SBI.
Currently, BI has use Rp100 trillion of government bond for monetary operation and aim to replace all the SBI by 2024.
Since 2010, the bank decided to further reduce outstanding in SBI and plans to eliminate it. These measures were taken to eliminate tenor-tenor SBI under nine months, the SBI tenor of one month, three months, six months, in the primary market. However, the third tenor SBI is still circulating in the secondary market.
“Policy in 2017 to strengthen and expand the macro prudential survaillence to identify financial risks nationwide. BI will refine Crisis Monetary Protocol and central bank function as a lender of last resort. We also will integrate Islamic financial and social sharia business, improve the quality of economic growth and will give attention to the small medium enterprises with encourage banks intermediary to them,” Agus said.
Commenting on the BI outlooks, Finance Minister Sri Mulyani Indrawati said, prospect of Indonesian economy in 2017 still robust and will growth at 5.1 percent and inflation have a big room to downward. Government and BI, She added, will improve the government bond market and manage the risk of the market’s dynamic.
“One time, BI will use government bond for monetary operation and we will coordinate with them to help the transition of the SBI’s replacement. This will help investors to get lowered rate for the securities note,” Sri Mulyani stated.
Chairman of KADIN Rosan P. Roeslani commenting, the BI outlooks inline with the enterpreneurs association views Indonesia economy will grow in the range of 5.1 to 5.3 percent for 2017. He said, government should maintain the domestic consumption growing and lowered lending rate to boost the economy in the coming years.