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Govt considers stabilization fund to anticipate crisis

Finance Minister Bambang Brodjonegoro has said that the government is considering the possibility of establishing stabilization fund to strengthen mitigation efforts to address the economic slowdown and to anticipate the possibility of an economic crisis in the country

The Jakarta Post
Jakarta
Fri, June 12, 2015

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Govt considers stabilization fund to anticipate crisis

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inance Minister Bambang Brodjonegoro has said that the government is considering the possibility of establishing stabilization fund to strengthen mitigation efforts to address the economic slowdown and to anticipate the possibility of an economic crisis in the country.

'€œWe are preparing the plan. It will not be a large reserve fund but a special fund we will use to carry out stabilization efforts. It will be an emergency fund. It'€™s still just a concept, thus it will not be implemented in the near future,'€ he said as quoted by Antara in Jakarta on Wednesday evening.

Bambang said that in theory, the stabilization fund would support the Bond Stabilization Framework (BSF), which was one of government'€™s mitigation tools used during the occurrence of capital outflow that could disrupt market stability.

The BSF is a framework that involves coordination between relevant units of the Finance Ministry and state-owned insurance companies as well as insurance firms under the coordination of the State-Owned Enterprises Ministry in purchasing government bonds.

Apart from the BSF, the government has also prepared a Crisis Management Protocol (CMP), in the form of an early warning system, to help it face crises in the financial sector and to reduce pressure on state finances.

The government has also prepared US$5.5 billion in standby loans from multilateral partners as part of efforts to maintain economic growth and macro-economic stability comprehensively.

'€œThe BSF is just a framework and is not final because in the next stage, it will require funds. On what its format will look like, this is what we are still considering,'€ said Bambang. (ebf)

 

 

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