Pandemic For Greedy Banks To Take Government Debt, This Is Sri Mulyani's Explanation

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said that currently there is a trend of increasing the collection of State Securities (SBN) by national banks.

In his notes, in 2019 before the pandemic the composition of SBN owned by the financial service institution was 20.73 percent. This figure then jumped to 25.28 percent until the first semester of 2021.

The Minister of Finance himself said that the interest of banks to collect state financing instruments could not be separated from the strategy of maintaining financial performance in the midst of strong business pressure due to the COVID-19 pandemic.

"This is a way for banks to survive because otherwise they will bear customer deposits (third party funds) that must be given interest," he said during a virtual working meeting with the House of Representatives Budgetary Agency (Banggar) on Monday, July 12.

The Minister of Finance added that the core business of banks through the intermediation function in the current pandemic conditions is quite restrained due to weak demand for credit from the public.

"They can't disburse credit because demand for credit has fallen due to an unstable economy," he said.

It didn't stop there, the former IMF boss also explained that the difficulty of banks in distributing credit was compounded by the risk of bad loans from existing customers.

"There must also be existing loans that have problems with bad payments," he added.

For this reason, the Minister of Finance assessed that the state debt instrument not only serves as a medium to finance the State Budget but also as a way to strengthen the national financial system at a macro level.

"So indirectly, debt securities issued by the government provide resilience to our banking sector," he said.

In addition to bank business players, SBN is also collected by two major categories, namely Bank Indonesia (BI) and foreign investors. The Minister of Finance said that if BI was recorded to have also increased SBN ownership from previously only 9.9 percent in 2019 to 23 percent in 2021.

The opposite happened to foreign investors, which decreased to 22 percent from the previous 38 percent.

"So the recomposition of our SBN illustrates that this is an important instrument both for the banking sector and also for BI to help the government in dealing with the extraordinary impact of COVID-19," concluded Sri Mulyani.