The Indonesian government is set to inject US$12 billion into commercial banks in a bid to stimulate credit growth and accelerate economic recovery. The funds, equivalent to around Rp 200 trillion, will be transferred from existing state deposits held at Bank Indonesia into six state-owned commercial banks.
Officials say the move is designed to boost liquidity in the banking sector and encourage lenders to expand credit to businesses and consumers. By moving deposits into commercial banks, the government hopes to create pressure on lenders to seek higher returns, which in practice means ramping up loan disbursements.
Finance Minister Purbaya Yudhi Sadewa clarified that the regulation will bar banks from channeling these funds into government bonds. Instead, the deposits must be used to support private sector activity, thereby strengthening the real economy rather than financing state deficits. The funds largely come from budget surpluses and unspent allocations, which until now have been parked passively in the central bank.
Economists, however, warn that liquidity alone may not be enough to boost lending. The central challenge remains weak loan demand, with many firms hesitant to borrow amid lingering uncertainties over investment climate, legal protection, and global headwinds. Without stronger confidence and supportive reforms, banks could remain cautious despite the influx of funds.
Still, the government insists the timing is favorable. With GDP growth running at about 5% and inflation contained at 2.5%, officials believe the extra liquidity can provide a credit push without triggering major inflationary risks. If successful, the policy could help Indonesia move closer to its ambitious growth target of 6–7% in the coming years.
Leave a comment