JAKARTA (TheInsiderStories) – Bank Indonesia (BI) launched a policy measures to maintain economic stability amid the spread of COVID-19, said the governor today (04/14). According to Perry Warjiyo, the policies also aimed to support the government program to fight the pandemic and stabilize the Rupiah movement.
To maintain the local exchange rate, he said, the central bank will increased the intensity of the triple intervention policy through spot, Domestic Non-deliverable Forward (DNDF), and purchase of government bond from the secondary market.
Then, to support the country’ efforts to recover the national economy from the impact of COVID-19, BI will increase monetary easing through quantitative easing through the expansion of monetary operations through the provision of term-repo to banks and corporations with underlying state bond transactions with tenors of up to one year.
The Bank also lowering the Rupiah Statutory Reserves by 200 basis points (bps) for commercial banks and 50 bps for sharia banks or sharia business units, starting May 1, 2020. In addition, said Warjiyo, BI will not impose additional giro obligations to fulfill the Ratio Macro-prudential Intermediation (RIM) both for commercial and sharia banks or sharia business units for one year, starting from May 1, 2020.
Furthermore, to strengthen the banking liquidity management and in connection with the reduction in the Rupiah statutory reserves, BI increased the Macro-prudential Liquidity Buffer ratio by 200 bps for commercial banks and by 50 bps for sharia banks or sharia business units, starting May 1, 2020.
“This must be fulfilled through the purchase of state bonds to be issued by the government in the primary market,” Warjiyo stated.
To further expand the use of non-cash payment transactions in mitigating the impact of COVID-19, BI also has improved various payment system policy instruments by supporting government programs in accelerating the distribution of non-cash social assistance programs to the public such as Family Hope Program, Non-Cash Food Assistance, Pre-Employment Cards, and Indonesia Smart Cards.
Then, to relax the credit card policy related to reducing the maximum interest rate, the minimum payment value, and the amount of late payment penalties and supporting the credit card issuer policy to extend the payment period for customers.
Today, the policymakers maintain the BI 7-Day Reverse Repo Rate (BI-7DRR) of 4.50 percent, the Deposit Facility interest rate of 3.75 percent, and the Lending Facility interest rate of 5.25 percent. This decision was taken to maintain external stability amid the uncertainty of global financial markets which is currently relatively high.
Even so, he claimed, the central bank still sees room for a rate cut with low inflationary pressures and the need to boost economic growth.
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