The Ministry of Finance and Bank Indonesia have enhanced coordination to support the implementation of the Government’s Asta Cita programs, particularly those focused on the people-centered economy. This collaboration includes an agreement to share interest costs on Government programs related to Public Housing and the Merah Putih Village Cooperatives.

The institutions stated that the synergy will be implemented transparently, accountably, and guided by good governance. All measures will remain aligned with prudent fiscal and monetary policy principles while maintaining market discipline and integrity.

Government, Bank Indonesia Align on Interest Cost Sharing for Asta Cita Programs

The interest cost sharing applies to Government Securities (SBN) issued to support Public Housing and Merah Putih Village Cooperatives programs. The mechanism is structured to equally divide the interest costs on realised budget allocations for these programs, after deducting returns from Government placements in domestic financial institutions.

The implementation takes the form of providing additional interest to Government accounts held at Bank Indonesia. This follows the central bank’s function as the State Treasurer, as outlined in Article 52 of the Bank Indonesia Act No. 23 of 1999, as amended by Act No. 4 of 2023, and Article 23 of Act No. 1 of 2004 concerning State Treasury.

The cost sharing is effective from 2025 until the completion of the relevant Government programs. Bank Indonesia ensures the measure remains consistent with monetary programs to preserve macroeconomic stability, while aligning with fiscal objectives to create more fiscal space and ease the public’s burden.

Prudent Fiscal Strategy Anchors Economic Management

Fiscal policy will continue to be implemented in a prudent and sustainable manner. The 2025 State Budget is managed cautiously, focusing on optimised revenue, effective and targeted expenditure, and sustainable financing strategies.

Budget allocations are prioritised for sectors that generate broad multiplier effects and promote inclusive growth. These include public housing initiatives, support for state-owned banks lending to Merah Putih Village Cooperatives, and other Government programs agreed with Bank Indonesia under the Asta Cita framework.

The 2025 budget deficit is expected to remain low and supported by professional financing management.

Bank Indonesia Maintains Liquidity and Supports Growth

Bank Indonesia continues to implement a policy mix to support economic growth and maintain macroeconomic stability. Since September 2024, the BI-Rate has been lowered by a total of 125 basis points, reaching the lowest level since 2022.

The central bank’s rupiah stabilisation policy includes intervention in offshore NDF markets and onshore spot and DNDF markets. In addition, it has conducted secondary market purchases of Government Securities (SBN), amounting to Rp200 trillion by the end of August 2025—Rp150 trillion of which was through the secondary market and Government debt-switching programs.

Bank Indonesia has also reduced the outstanding balance of Bank Indonesia Rupiah Securities (SRBI) from Rp923 trillion at the beginning of 2025 to Rp715 trillion by the end of August. The Macroprudential Liquidity Incentive Policy (KLM) reached Rp384 trillion by the end of August 2025, supporting overall monetary efforts alongside accelerated payment system digitalisation.

Policy Synergy Reinforces Governance and Accountability

The Ministry of Finance and Bank Indonesia reaffirm their commitment to implementing interest cost sharing based on prudent fiscal and monetary policies. The joint coordination will continue in line with applicable laws and regulations.

Both institutions stated that policy coordination has been and will remain close, ensuring the stability and sustainability of national economic growth.

PHOTO: FREEPIK

This article was created with AI assistance.