Indonesia confident in financial sector’s resilience

Indonesia is confident in its financial sector’s resilience even under extreme scenarios in the global economy, according to the latest stress tests conducted by the Bank Indonesia (BI), Indonesia’s Finance Ministry, Financial Services Authority (OJK), and Deposit Insurance Corporation (LPS).
Jakarta (VNA) – Indonesia is confident in its financial sector’s resilience even under extreme scenarios in the global economy, according to the latest stress tests conducted by the Bank Indonesia (BI), Indonesia’s Finance Ministry, Financial Services Authority (OJK), and Deposit Insurance Corporation (LPS).

The results revealed that financial institutions under the Indonesian Government’s watch still show resilience, said Indonesian Finance Minister Sri Mulyani Indrawati at a recent press briefing.

She added that the institutions will remain on guard for sudden changes brought about by geopolitical dynamics.

Indrawati said the tests included "extreme" hypothetical situations, but she did not reveal further details.

Meanwhile, Bank of Indonesia (BI) Governor Perry Warjiyo said that these tests involve a number of scenarios, such as the US Federal Reserve (Fed)’s sudden increase of interest rates, rising oil prices, geopolitical tensions, and the impact of El Nino phenomenon, recession and divergence in global economic growth.

In a press briefing last month, he said that Indonesia's financial sector has shown "strong resilience" in the new tests, adding that this conclusion is made on the basis that capital resources are still solid, bad debt ratio is low, and liquidity is still at a good level.

Last month, BI raised the operating rates, but major banks and analysts held that Indonesia's banking sector can still meet its credit growth target thanks to abundant liquidity.

In January, BI forecast that this year’s credit growth may reach 10-12%. However, the growth slowed down in the middle of the year, leading to the bank’s lowering of its forecast to 9-11% in August.

As of the end of September, Indonesia’s credit growth was 8.96%, lower than the rate of 9.06% recorded in August./.
VNA

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