JAKARTA – The global financial organization the International Monetary Fund (IMF) has officially given its first view regarding the war situation in Eastern Europe between Russia and Ukraine.
Through IMF Managing Director, Kristalina Georgieva, the global financial institution said that every nation must increase awareness of the potential for significant increases in commodity prices soon.
"In many countries, the crisis has created an adverse shock to both inflation and (productive) activity amidst increasing price pressures", she said in a statement quoted on Monday, March 7.
According to Kristalina, this situation requires special attention from the central bank as the monetary authority so that inflationary pressures do not have a further impact on currency values.
"Monetary authorities need to carefully monitor international price increases against domestic inflation to calibrate the appropriate response", she said.
Not only that, but Kristalina also conveyed the IMF's message to the finance ministers as fiscal managers (state finances) so that they can take policies that are oriented towards protecting the people from the impact of price increases.
"Fiscal policy needs to support the most vulnerable households to help offset rising costs of living", she stressed.
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Meanwhile, the Minister of Finance, Sri Mulyani, did not deny that the military crisis in Ukraine has created pressure on the State Budget as a fiscal instrument, especially in terms of energy subsidies. She said the government had disbursed IDR 10.2 trillion to fulfill the mandatory energy subsidy throughout January 2022.
"The operation of the state budget is very real in protecting the community, namely from the increase in energy prices which have soared very high", said Minister of Finance, Sri Mulyani.
On the other hand, Bank Indonesia (BI) Governor, Perry Warjiyo, realized that rising geopolitical tensions are very likely to cause supply chain disruptions that result in inflationary pressures.
"Bank Indonesia remains committed to maintaining price stability and strengthening policy coordination with the government through the Central and Regional Inflation Control Teams (TPIP and TPID) to maintain CPI inflation (Consumer Price Index) within its target range, which is 3 percent plus-minus 1 percent for the 2022 period", said Bank Indonesia Governor, Perry Warjiyo.
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