Credit Request Weakens, Liquidity Injection Is Less Optimal

JAKARTA - CORE Indonesia Economic Researcher Yusuf Rendy Manilet assessed that the easing of monetary policy and support for the real sector through liquidity injection from the Ministry of Finance is actually interrelated.

However, according to him, the effectiveness of liquidity policies in terms of fiscal will be more optimal if it is balanced with increasing demand (demand side) in the community.

He said that currently, demand for credit shows signs of a slowdown, in fact, the amount of credit that has been approved but has not been disbursed continues to increase.

"This shows that the economy is facing a weakening in terms of credit demand. Weak demand due to national economic conditions will certainly reduce the effectiveness of liquidity injection policies," he said in his statement, Thursday, September 18.

Furthermore, Yusuf also highlighted the government's latest fiscal policy known as incentives 8+14+5, especially incentives number 8 which will begin to be distributed this year.

He noted that the impact of these incentives on strengthening people's purchasing power and economic growth is still limited, one example is the policy of providing wages for interns.

"First, the potential encouragement from this incentive to boost the economy, especially people's purchasing power, is still limited. For example, the policy of providing wages for interns. Although conceptually it is a positive policy, the scope of internship participants to total unemployment is still very small," he explained.

In terms of implementation, he also highlighted the unclear regarding the involvement of the private sector and if the private sector will be involved, then the implementation mechanism is not clear enough, which could create uncertainty in the realization of the policy.

In addition, Yusuf emphasized that this policy is short-term, because it has only been announced towards the end of the year and only has less than three months left for its implementation, so this further limits its effectiveness in encouraging public demand.

"On the other hand, other policies that actually have great potential to support purchasing power such as discounted electricity rates are not continued. In fact, in the first quarter of this year, this policy has proven to be quite helpful in maintaining people's purchasing power," he said.