KSSK: Economy Continues To Improve Supported By Domestic Recovery Optimism

KSSK Press Conference in Jakarta, Tuesday, January 31, 2023 (Photo: Andry Winanto/VOI)

JAKARTA – The Financial System Stability Committee (KSSK) stated that Indonesia's economy continues to improve amidst optimism for a continued domestic recovery.

The Minister of Finance (Menkeu) Sri Mulyani said this assumption was based on the improvement in various economic indicators and the domestic financial system.

"Global pressure will begin to ease at the end of the fourth quarter of 2022, although there are risks that need to be watched closely," she said at a press conference in Jakarta, Tuesday, January 31.

Sri Mulyani explained, the improvement in Indonesia's economic growth continued with strong household consumption accompanied by a lower inflation rate than forecast.

"Inflation decreased faster than predicted," she said.

On the same occasion, the Governor of Bank Indonesia (BI) Perry Warjiyo revealed that his party would continue to strengthen the policy mix to maintain stability and momentum for economic recovery.

"Monetary policy will remain focused on maintaining stability (prostability) while macroprudential policies, digitalization of the payment system, deepening of money markets, as well as inclusive and green economic-financial programs will continue to be directed at promoting growth (pro-growth)," he said.

According to Perry, an increase in the BI rate by 225 bps to 5.75 percent in January 2023 is sufficient to ensure that core inflation remains within the range of 3 percent plus minus 1 percent in the first semester of 2023 and CPI inflation returns to the target of 3 percent plus minus 1 percent. in semester II.

"The rupiah exchange rate stabilization policy to control imported inflation (imported inflation) is strengthened by foreign currency monetary operations, including the implementation of instruments in the form of foreign currency Term Deposits (TD) from Export Proceeds (DHE) according to market mechanisms," he explained.

Meanwhile, Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar said that the performance of banking intermediation, distribution of financing continued a positive trend with double-digit growth.

"Credit risk is on a downward trend, both in the banking and financing industries supported by adequate liquidity and strong capital," he added.

The Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadewa said that as of December 2022, the number of customer accounts guaranteed for all of their savings was 99.9 percent of the total accounts or the equivalent of 508.21 million accounts.

"The LPS's policy on guarantees and resolutions will continue to support economic recovery and maintain financial stability through, among other things, strengthening the deposit insurance coverage policy in terms of guarantee nominal limits (IDR 2 billion) and TBP. Then, ensure the readiness of the early involvement mechanism in bank resolutions when needed, as well as evaluate the continuation of easing the imposition of guarantee premium fines," he said.

KSSK itself is committed to continuing to improve coordination in observing global dynamics and potential future risks, including in preparing a coordinated policy response to mitigate the risk of deteriorating economic conditions and domestic SSK.

For information, KSSK is a forum for cooperation and policy synergy between the Minister of Finance, Bank Indonesia, OJK and LPS.