No. 26/261/DKom
Currency stability is the manifestation of national sovereignty. Appreciation, therefore, is extended to Bank Indonesia for maintaining rupiah exchange rate stability thus far. Appreciation is also offered to Bank Indonesia, the Ministry of Finance and Financial Services Authority (OJK) for cooperating in close synergy as the first line of defence in maintaining economic stability, which must be preserved to strengthen stability and national economic transformation. “All elements must work hand-in-hand across all areas of expertise in unity, for we are confident of achieving our aspirations." That was the key takeaway delivered by the President of the Republic of Indonesia, Prabowo Subianto, at the Bank Indonesia Annual Meeting (PTBI) 2024, entitled 'Synergy to Strengthen Stability and National Economic Transformation'. The PTBI 2024 event was held at Bank Indonesia Head Office in Jakarta (29/11/24).
The Governor of Bank Indonesia, Perry Warjiyo, took the opportunity to express buoyant optimism on behalf of Bank Indonesia concerning continuous economic improvement in Indonesia moving forwards despite the need for vigilance over several emerging global challenges. Bank Indonesia projects solid economic growth in 2025 in the 4.8-5.6% range before accelerating to 4.9-5.7% in 2026 on the back of private consumption, investment and solid export performance. Inflation will remain under control within the 2.5%±1% target corridor in 2025 and 2026, underpinned by monetary policy consistency, fiscal policy and the National Movement for Food Inflation Control (GNPIP). External and financial system stability will be maintained, accompanied by the inexorable march of digitalisation. Moving forward, five salient global challenges must be monitored and anticipated, namely global economic growth moderation and divergence, a prolonged disinflation process, persistently high interest rates in advanced economies, a strong US dollar and capital flight from emerging markets to advanced economies.
Synergy is key to the economic outlook in Indonesia in terms of strengthening stability and national economic transformation. Policy synergy must be strengthened in the face of various increasingly complex emerging challenges and to accelerate national economic transformation towards stronger economic growth. To that end, policy mix synergy encompasses five important areas, namely: (i) macroeconomic and financial system stability, (ii) domestic growth by increasing consumption and investment, (iii) increasing productivity and national economic capacity, (iv) financial market deepening for economic financing, and (v) payment system digitalisation and the national digital economy and finance. Towards modern and deep money and foreign exchange markets (PUVA) as well as supporting national economic financing, Bank Indonesia launched the Money Market and Foreign Exchange Market Development Blueprint (BPPU) 2025-2030 at PTBI 2024.
The Bank Indonesia policy mix in 2025 will remain oriented towards maintaining stability and supporting sustainable economic growth in close synergy with national economic policy. The monetary policy instituted by Bank Indonesia in 2025 will remain focused on stability, while monitoring room to stimulate growth (pro-stability and growth). Meanwhile, Bank Indonesia's four other policies, namely macroprudential policy, payment system policy, financial market deepening policy, as well as inclusive and green economy and finance policy, will remain directed towards and part of the joint efforts to accelerate national economic growth (pro-growth). Bank Indonesia will also continue comprehensive (end-to-end) institutional reform to develop a credible, professional and transparent central bank with good governance.
Each of the policies is elucidated as follows:
1. Monetary Policy
Bank Indonesia monetary policy in 2025 will remain oriented towards achieving the inflation target and rupiah exchange rate stability, while continuing to support national economic growth. Forward-looking and pre-emptive monetary policy aims to achieve the inflation target set by the Government, while monitoring room to foster economic growth, as well as maintaining rupiah stability in line with achieving the inflation target and maintaining external stability against global spillovers.
2. Macroprudential Policy
Bank Indonesia will maintain an accommodative macroprudential policy stance in 2025 to support sustainable economic growth, while maintaining financial system stability. This will be achieved through three key instruments, namely: (i) Macroprudential Liquidity Incentive Policy (KLM) to revive bank lending/financing to priority sectors creating job opportunities by increasing the size of the incentives and the number of eligible banks, commencing in January 2025, (ii) loose liquidity policy through the Macroprudential Liquidity Buffer (MPLB) as well as downpayment policy on property and automotive loans, and (iii) strengthening systemic surveillance to maintain financial system stability.
3. Payment System Policy
Payment system policy in 2025 will focus on accelerating digitalisation to support sustainable economic growth in accordance with the Indonesia Payment System Blueprint (BSPI) 2030. The direction of payment system policy in 2025 will be implemented through five initiatives, namely: (i) development of New BI-FAST and fast payment, modernisation of the Bank Indonesia – Real Time Gross Settlement (BI-RTGS) system and payments data infrastructure, (ii) payment system industry consolidation based on Transactions, Interconnection, Capacity, Risk Management and Information Technology (TIKMI), (iii) QRIS innovation, targeting 58 million users and 40 million merchants, while establishing the Bank Indonesia Digital Innovation Centre (BIDIC) in collaboration with the Indonesia Payment System Association (ASPI), (iv) expanding cooperation related to QRIS with several countries, BI-FAST through project Nexus and local currency transactions (LCT), and (v) advanced experimentation of the Digital Rupiah as the only digital legal tender in Indonesia.
4. Money Market and Foreign Exchange Market Deepening Policy
Money market deepening policy in 2025 will remain focused on creating and maintaining a modern money market based on international standards, strengthening the effectiveness of Bank Indonesia policy mix transmission, and supporting financing for sustainable economic growth. Money market and foreign exchange market deepening policy will be harmonised with the Money Market and Foreign Exchange Market Development Blueprint (BPPU) 2025-2030.
5. Inclusive and Green Economy and Finance Policy
Bank Indonesia will continue expanding and strengthening development programs targeting the inclusive and green economy-finance in pursuit of sustainable economic growth and effective inflation control. Bank Indonesia will also continue strengthening its function as a pioneer and driver of the sharia economy and finance as a new source of national economic growth.
PTBI 2024 also hosted the BI Award 2024, as a form of recognition and appreciation for 51 strategic partners from Bank Indonesia as the monetary, financial system and payment system authority. The awards were presented to financial institutions, Payment Service Providers (PSP), Rupiah Currency Management Services Providers (PJPUR), corporations and businesses, including MSMEs, as well as individuals making significant contributions in four key areas, namely monetary and financial system stability, the payment system, MSME development and the sharia economy and finance, as well as supporting Bank Indonesia policy. The awards also reflect the close synergy built between Bank Indonesia and its strategic partners in conjunction with the Government, Financial Services Authority (OJK) and Indonesia Deposit Insurance Corporation (LPS) in terms of strengthening national economic resilience and revival.
PTBI is a strategic forum held at the end of each year to deliver Bank Indonesia's views concerning the current state of the economy, the challenges, outlook and direction of the Bank Indonesia policy mix, while also presenting the remarks of the President of the Republic of Indonesia. PTBI 2024 was attended by the President of Indonesia, Prabowo Subianto, Leaders and Members of the MPR, DPR and DPD RI, Leaders of State Institutions, Ambassadors from various countries, Ministers from the Merah Putih Cabinet, Chairman of OJK and Chairman of LPS, and other relevant institutions, regional leaders, leaders of the banking industry and business community, academics, leaders of the national mass media as well as representatives from several international organisations. The public were also invited to watch the live stream of PTBI 2024 through various Bank Indonesia social media channels as well as Bank Indonesia Representative Offices throughout Indonesia and abroad.
The remarks at PTBI 2024 are available for download in full via the link.
Jakarta, 30th November 2024
Communication Department
Ramdan Denny Prakoso
Executive Director
