Indonesia to Deposit $400 Trillion More into State Banks to Ease Liquidity Crunch

Indonesian Finance Minister Purbaya Yudhi Sadewa revealed on Friday that the government will inject another 400 trillion rupiah into state-owned banks, known as Himbara. This significant deposit is intended to combat a liquidity drought, ensuring banks possess adequate capital to extend credit and thereby reduce market interest rates.

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There is still 170 trillion rupiah there, I will return it to 200 trillion rupiah for the long term, add another 100 trillion rupiah perhaps for 3-4 months, then add another 100 trillion rupiah that is flexible.

"There is still 170 trillion rupiah there, I will return it to 200 trillion rupiah for the long term, add another 100 trillion rupiah perhaps for 3-4 months, then add another 100 trillion rupiah that is flexible," Sadewa stated during a press conference at the Ministry of Finance. He explained that the re-deposit of excess budget balances (SAL) was a directive from President Prabowo Subianto to keep the economy functioning.

Sadewa highlighted that the weakening rupiah, coupled with dwindling liquidity, has slowed the economy. He noted that the Ministry of Finance had been gradually withdrawing funds from state banks over the preceding two weeks, which inadvertently led to liquidity difficulties within the banking sector. "It turns out that is the only engine for economic growth at this time," he remarked.

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It turns out that is the only engine for economic growth at this time.

Earlier, Sadewa met with leaders of Himbara banks to discuss the re-deposit of SAL. He humorously recounted the bankers' initial distress, saying, "They came to the meeting wanting to be angry about everything. When they came to me, they were happy, their heads were no longer smoking."

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They came to the meeting wanting to be angry about everything. When they came to me, they were happy, their heads were no longer smoking.