Financial Services Authority (OJK) Chairman Mahendra Siregar is buoyant about Indonesia’s economy still clocking strong growth of above five percent in 2022 despite the rise in fuel oil prices that will affect inflation.
In fact, the rise in fuel oil prices serves as a signal that the improvement to meet the demand in Indonesia can be handled by an increase in investment, he noted through a press statement, Monday.
According to Siregar, it can also be responded through production and supply from various goods and services required by the people.
With this, he expects that banks and all financing institutions can respond by distributing intermediary function to sectors that require financing or credit to improve their production and conduct investment.
The rise in the fuel oil price is the response long awaited by the government to handle budget deficit, he explained.
This becomes its own risk as a result of the rise in global oil prices in recent times, he stated.
If the ongoing global uncertain condition is not handled aptly, then this will create a risk that can affect the trust on Indonesia’s economy and sustainable fiscal management.
Hence, the rise in the fuel oil price that has been determined provides clarity on the policy that the government takes to maintain a sustainable fiscal policy despite lingering uncertainty over the oil prices, Siregar noted.
“This can send across a strong signal on how to act in the future to handle various existing risks,” he remarked.
“This also sends a very clear signal and maintains trust that the government is taking a heavy decision, but nonetheless, go through with it,” he stated.
With the existing trust, he expects that banks can utilize liquidity to immediately distribute credit, whether through work capital credit (KMK) or investment credit.
Currently, the KMK increases quite high and if economic growth can continue to be maintained, then investment credit can also follow sometime in the future.
Source: Antara News