Three Reasons That Make BI Boss Perry Warjiyo Confident RI's Economy Is Strong In Facing The Fed's Tapering

Governor of Bank Indonesia Perry Warjiyo (Photo: Doc. Antara)

JAKARTA - Governor of Bank Indonesia (BI) Perry Warjiyo believes that Indonesia's economic condition is strong enough to face the reduced liquidity (tapering) of the US central bank, The Federal Reserve or The Fed, in financial markets.

According to Perry, there are at least three things that form the basis for this assumption. First, the clarity of communication from the Fed which continuously provides information regarding tapering.

"This makes the market have better anticipatory steps," he said in a press conference of the Financial System Stability System Committee (KSSK) which was broadcast virtually, at the end of last October.

Second, the current condition of the Indonesian economy tends to have better fundamentals than before

“Better economic conditions are reflected in a much lower current account deficit of 0.8 percent of GDP (gross domestic product). This is different from the 2013 taper tantrum, where at that time our current account deficit was more than 3 percent of GDP,” he said.

Meanwhile, the third reason put forward by the BI boss was regarding the ability of close coordination between the monetary authority and the government, in this case the Ministry of Finance (Kemenkeu).

"This is realized through stabilization measures, not only the exchange rate but also changes in the yield of SBN (State Securities) which are continuously being carried out well. In addition, our foreign exchange reserves are much larger, namely 146.9 billion US dollars," he said.

To note, one form of cooperation between BI and the government that is currently being carried out is related to the purchase of SBN in the primary market as part of a policy synergy for funding the 2021 State Budget.

As of October 15, 2021, the purchase of SBN in the primary market was recorded at Rp. 142.74 trillion, consisting of Rp. 67.28 trillion through the main auction mechanism and Rp. 75.46 trillion through the Greenshoe Option (GSO) mechanism.