Debt Again, Indonesia Receives IDR 7 Trillion Loans From ADB: To Help MSMEs And Marginalized Groups

Illustrated. (Irfan Meidianto / VOI)

JAKARTA - The Asian Development Bank (ADB) has approved a policy-based loan worth 500 million US dollars (estimated exchange rate of Rp14,100 per US dollar). The funds are to support the Indonesian government's efforts to expand financial access for MSMEs and marginalized groups.

ADB Finance Sector Specialist for Southeast Asia Poornima Jayawardana said the loan was provided to increase Indonesia's financial inclusion amid the COVID-19 pandemic.

An innovative financial inclusion promotion program will help the Indonesian government better target and monitor financial inclusion, improve the payment infrastructure, and strengthen the regulatory framework for digital financial services, data privacy, consumer protection and financial literacy.

Furthermore, he explained, this program would help build a more inclusive financial services sector, which would reduce poverty and inequality, and support Indonesia's long-term sustainable development.

"Financial inclusion will play an important role in Indonesia's recovery from the pandemic. More equal and efficient access to financial products and services can mitigate the economic and social impacts of the pandemic, rebuild livelihoods, and prepare for future economic shocks," he said in a statement. written received by VOI, Wednesday, December 9.

Poorima said that the support for reform from this program resulted in policies and technology that encouraged innovation by opening access to formal financial products and services.

"Improving the quality of these services as well as reaching a wider and underserved population," he said.

Based on a national survey of financial inclusion conducted by the National Council on Financial Inclusion, it shows that the percentage of adults in Indonesia with bank accounts has increased from 35 percent in 2016 to 56 percent in 2018. Despite progress, Indonesia is still lagging behind neighboring countries such as Malaysia and Thailand.

Furthermore, Poorima said, therefore providing financial services for all Indonesians is a challenge for a country that has such great geographic and cultural diversity. As well as significant differences in access to financial products between regions and between population groups.

Moreover, the COVID-19 pandemic has also worsened the financial situation, because people who do not have access to financial services usually do not have savings or access to loans to survive an economic downturn.

"The ADB program supports the government's goal of increasing the number of Indonesians using financial products or services from formal financial institutions, from 76 percent in 2019 to 90 percent in 2022," he said.

ADB has supported financial inclusion in Indonesia through a variety of programs since 2002. At that time, ADB began helping develop the microfinance sector to increase access to finance for micro, small and medium enterprises.

For your information, the Ministry of Finance (Kemenkeu) noted that the position of government debt until the end of October 2020 reached IDR 5,877.17 trillion.

Based on data from the Ministry of Finance, the debt position increased by Rp120.3 trillion when compared to debt at the position in September 2020 which was Rp5,756.87 trillion. If detailed further, the central government's debt is still dominated by Government Securities (SBN) amounting to Rp5,028.86 trillion or 85.56 percent of total government debt.

Then followed by loan debt amounting to IDR 848.85 trillion, or 14.44 percent of total government debt. Meanwhile, SBN itself consists of SBN in domestic denominations which reached Rp3,782.86 trillion. Meanwhile, government bonds denominated in foreign currency reached Rp1,246.16 trillion.

In addition, loan debt, consisting of government foreign loans reaching Rp. 837.77 trillion, as well as government domestic loans reaching Rp. 11.08 trillion.