BI, Japan Renew Bilateral Swap Arrangement

ASEAN+3 Meeting in Manila - Photo by Bank Indonesia

JAKARTA (TheInsiderStories) – Bank Indonesia (BI) and Japan’s Finance Ministry have agreed to amend the bilateral swap arrangement (BSA) with a value of US$22.76 billion to overcome the difficulties of short-term liquidity, said an official on Friday (04/03).

For information, the BSA agreement between the two countries was first signed on Feb. 17, 2003 and has been amended and extended several times.

The agreement has signed at the sideline meeting of ASEAN+3 in Manila, Philippines. It said, the amendment allow Indonesian central bank to borrow in Japan Yen, expanded from previous agreement in 2003, which only allowed U.S dollar swap.

According To the BI’s official Doddy Zulverdi, the current BSA agreement between Indonesia and Japan was agreed on Dec. 12, 2016 and will expire on Dec. 12, 2019. He said, the amendment is to strengthening of the previous BSA especially in terms of the flexibility of currency that can be used.

BI, which spent about $5 billion of its reserves in the first quarter of this year in coping with the downward pressure on the rupiah, underlined in its April policy statement the potential risks to its outlook for inflation and the current account, indicating a high probability of monetary tightening.

The rise in the Fed fund rate and the steady of oil price rise do pose a double whammy for Indonesia in terms of current account deterioration and inflationary pressures because the country is a net oil importer. In the first quarter alone, its oil import bills were estimated to have increased by more than $1 billion.


ASEAN countries with China, Japan, and Korea (ASEAN+3) are committed to improving the resilience of regional economies to support sustainable global economic growth. This was conveyed by BI’s Senior Deputy Governor Mirza Adityaswara after attending the meeting.

In the meeting, it was also stated that ASEAN + 3 countries continue to be aware of the global economic risks that are still covered by uncertainty, both due to protectionist policies, acceleration of tightening global financial conditions, as well as geopolitical risks.

Adityaswara also expressed the commitment of Central Bank Governor and Finance Minister of ASEAN+3 to continue regional financial cooperation through exchange of views on the latest global and regional economic developments, policy responses, and cooperation to strengthen regional economic resilience.

The meeting also emphasized the commitment to implement prudent macroeconomic policies, including policy mix with appropriate monetary, fiscal, macro-prudential and structural policies to promote strong, sustainable, balanced and inclusive growth while enhancing economic and financial resilience of the region.

In the meeting, the Governors of the Central Bank and the ASEAN Finance Minister + 3 confirmed that, in an increasingly integrated global financial system, stronger cooperation in global financial safety nets is critical to prevent future crises and to maintain global financial stability .

The Governors of the Central Bank and the Finance Minister agreed to continue working together to strengthen the role of the Chiang Mai Initiative as an important part of the regional financial safety net, while maintaining and improving its operational readiness.

Furthermore, they said, strengthening the cooperation of Chiang Mai Initiative facilities at regional level as Regional Financial Arrangement with IMF facility as Global Financial Safety Net as part of global financial safety net will be continuously improved to achieve an increasingly resilient and integrated ASEAN+3 region.