Bank Indonesia Welcomes the IMF’s Plan for an Integrated Policy Framework - Bank Sentral Republik Indonesia
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December 12, 2019

The Governor of Bank Indonesia, Perry Warjiyo, has welcomed the IMF’s plan to release an integrated policy framework in response to inputs and recommendations from various developing economies, including Indonesia. This issue was raised at the IMF-World Bank Spring Meetings held in Washington, DC from 11-13th April 2019. Indonesia has long voiced the importance of an optimal policy mix, primarily for a small open economy, to effectively mitigate global economic volatility. Indonesia has consistently raised that point with the Fund as a policy recommendation when facing global volatility, which tends to prioritise the use of traditional instruments such as interest rates and exchange rates. The move by the IMF to formulate an integrated policy framework represents an important advancement for Indonesia and other small open economies. Furthermore, Bank Indonesia also urged the Fund to continue deepening rigorous studies into the spillovers spurred by trade tensions, for instance the impact on the global value chain.

The IMF has developed a new policy framework known as the Integrated Policy Framework (IPF) to mitigate risk, increase resilience and implement inclusive and sustainable pro-growth policies.  Furthermore, the new integrated policy framework takes into consideration the interactions between monetary policy, exchange rate policy, macroprudential policy and capital flow management.

The meeting also highlighted global economic moderation and explored mitigation efforts. The global economy has been projected to decelerate from 3.6% in 2018 to 3.3% in 2019 before finally regaining momentum in 2020 at 3.6%.

The global economy is projected to continue expanding yet more slowly than initially predicted in October 2018. The global economy is indeed forecasted to bounce back in 2020 despite the various risks overshadowing growth, including trade tensions, policy uncertainty, geopolitical risks, tighter financial conditions accompanied by limited policy space, high debt as well as increasing vulnerabilities and fragilities in the financial sector. Therefore, financial authorities around the world have agreed to implement financial and structural reforms in order to mitigate the risks, increase resilience and institute inclusive policies, while expanding international cooperation.

As part of the IMF-World Bank Spring Meetings 2019, a high-level G20 meeting of finance ministers and central bank governors was also convened. At the meeting, Indonesia and other G20 members agreed to strengthen international cooperation in order to support strong, sustainable, balanced and inclusive economic growth. Moreover, Indonesia reemphasised the importance of policy coordination during a phase of global economic moderation to maintain stability and stimulate growth. Policy coordination has successfully been implemented in Indonesia, as evidenced by the solid economic fundamentals maintained despite global economic uncertainty and moderation. National economic growth in Indonesia hit 5.17% in 2018, the highest level on record for the past five years. Domestic economic momentum has been sustained with the help of an effective mix of monetary, fiscal and structural policies to maintain macroeconomic and financial system stability, while simultaneously bolstering resilience to external risks.

The BI Governor also met with representatives of financial authorities from various jurisdictions to strengthen cooperation and exchange information on the latest global economic developments. In addition, Bank Indonesia and the Ministry of Finance also conducted meetings with rating agencies and investors to relay the latest information concerning economic developments in Indonesia and the policy response instituted by Bank Indonesia and the Government.

Jakarta, 15 April 2019
Communication Department

Onny Widjanarko
Executive Director


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