Indonesian Government and Bank Indonesia Strengthen Fiscal and Monetary Coordination

Indonesian government officials and Bank Indonesia (BI) have agreed to enhance fiscal and monetary policy coordination to stabilize the rupiah and support economic growth amid global uncertainty.

Key points

• The agreement includes increasing the yield attractiveness of domestic financial instruments to encourage capital inflows.
• Government cash management will remain at Bank Indonesia, with adjustments to the remuneration paid to the government.
• Officials aim to mitigate the impact of currency volatility on small businesses and domestic production costs.
• The government plans to accelerate programs in the food, energy, fisheries, and industrialization sectors to strengthen the real economy.

Why it matters

The coordinated policy response aims to restore market confidence and protect the purchasing power of citizens against the backdrop of a weakening currency.