Banks Required to Use Government Funds for Credit: A New Strategy to Boost the Indonesian Economy

Bittime - The Indonesian government has just announced an important policy:banks are required to use government funds for credit, not to purchase bonds. This policy was announced by the new Finance Minister, Purbaya Yudhi Sadewa, as an initial step to encourage higher economic growth.

With an additional Rp200 trillion in liquidity, the government wants to ensure funds actually flow to the real sector and support national economic growth targets.

Rp200 Trillion Fund to Boost Credit

As much Rp200 trillion (US$12.2 billion)will be distributed to state-owned banks, including Bank Mandiri, BNI, BRI, BTN, and Bank Syariah Indonesia. These funds are allocated in the form of adeposit on callfor six months, with an interest rate equivalent to 80.5% of BI's benchmark interest rate.
The goal is clear: to ensure that funds are used for credit expansion, not for investment instruments such as bonds.

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Focus on the Real Sector

According to Purbaya, the current banking system is still considered "dry" in terms of credit distribution. With the policybanks are required to use government funds for creditThe government wants to ensure that business capital can be more easily accessed by productive sectors, from MSMEs to national strategic projects.

This is expected to create a double effect through a multiplier effect in the economy.

Economic Growth Target of 6–7%

Since the COVID-19 pandemic, Indonesia's economic growth has remained at around 5%. Through this policy, the government is targeting growth of up to 5%.6–7%, even approaching President Prabowo Subianto's target of 8%.

This credit fund is expected to be a catalyst to accelerate investment, expand employment opportunities, and strengthen people's purchasing power.

Fund Monitoring Mechanism

To ensure it reaches the right target, the bank receiving the funds is required to:

• Report the use of funds every month to the Ministry of Finance.

• Signed a cooperation agreement with the Directorate General of Treasury.

• Allocate funds transparently for credit financing, not short-term investment instruments.

This oversight measure is important so that policies do not merely increase liquidity, but actually increase credit distribution to the public.

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Conclusion

Policy banks are required to use government funds for creditThis is the government's new strategy to stimulate economic growth. With Rp200 trillion in funds channeled to state-owned banks, it is hoped that credit will flow more rapidly to the real sector.

However, the effectiveness of this policy still depends on the bank's ability to channel loans appropriately and to truly productive sectors.

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FAQ

What is the main objective of this policy?

To ensure that government funds flow to the real sector through credit distribution.

How much total funds does the government distribute?

Rp200 trillion or around US$12.2 billion.

Which banks accept these funds?

Bank Mandiri, BNI, BRI, BTN, and Bank Syariah Indonesia.

Can the funds be used to purchase bonds?

No, funds can only be used for credit.

How is supervision carried out? 

Banks are required to report the use of funds every month to the Ministry of Finance.