Bank Indonesia Claims The Liquidity Is Maintained Despite A Decline

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) reported that economic liquidity or money supply in a broad sense (M2) in May 2021 was in a maintained condition despite a decline in numbers.

Head of the BI Communications Department Erwin Haryono said that the M2 position in May 2021 was IDR 6.994.9 trillion or grew 8.1 percent year on year (yoy), slowing compared to the previous month's growth of 11.5 percent yoy.

"The slowdown occurred in the majority of components of the narrow money supply (M1) and quasi-money", he said as quoted by the official website, Tuesday, June 22.

Erwin added that M1 growth in May 2021 was 12.6 percent yoy, lower than April 2021 growth of 17.4 percent yoy.

Quasi money growth also slowed, from 9.7 percent yoy in the previous month to 6.8 percent yoy in May 2021.

"Based on the influencing factors, the slowdown in M2 in May 2021 was mainly influenced by the slowdown in net foreign assets", he said.

Meanwhile, net foreign assets grew 6.4 percent yoy, slower than 10.7 percent yoy in April 2021.

Meanwhile, net bills to the central government grew 61.4 percent yoy, higher than the previous month's growth of 45.0 percent yoy.

In addition, credit growth recorded a contraction of minus 1.3 percent yoy, although it continued to show improvement compared to growth in March and April 2021, which were -3.7 percent yoy and minus 2.4 percent yoy.

Previously, BI Governor Perry Warjiyo said that liquidity conditions remained loose driven by accommodative monetary policy and the impact of Bank Indonesia's synergy with the government in supporting the national economic recovery.

"Bank Indonesia has increased liquidity (quantitative easing) in banks by IDR 94.03 trillion throughout 2021 or until June 15", he said in a virtual press conference after the Board of Governors' Meeting last week.