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Govt confident financial sector ready to withstand extreme scenarios
Indonesia’s financial sector is resilient enough not to buckle even under extreme scenarios for the global economy, according to the latest stress tests conducted jointly by Bank Indonesia (BI), the Finance Ministry, the Financial Services Authority (OJK) and the Deposit Insurance Corporation (LPS).
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Financial Services Authority (OJK) chairman Mahendra Siregar (left), Finance Minister Sri Mulyani Indrawati (second left), BI Governor Perry Warjiyo and Deposit Insurance Corporation (LPS) head Purbaya Yudhi Sadewa pose for a photo on Nov. 3, 2023, in the BI office. (The Jakarta Post/Deni Ghifari)
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ndonesia’s financial sector is resilient enough not to buckle even under extreme scenarios for the global economy, according to the latest stress tests conducted by Bank Indonesia (BI), the Finance Ministry, the Financial Services Authority (OJK) and the Deposit Insurance Corporation (LPS).
“According to stress test results, financial institutions under our watch still show resilience,” said Finance Minister Sri Mulyani Indrawati at the Financial System Stability Committee (KSSK) press briefing on Friday.
She added that the institutions would remain on guard for sudden changes brought about by geopolitical dynamics.
Sri Mulyani claimed the stress-testing included "extreme" scenarios, albeit ones that remain within the realm of plausibility.
“We use a rather high level of stress, but one that is still plausible. Meaning we don’t use extreme ones that are implausible,” she asserted, without specifying the assumptions.
Speaking at the same briefing, BI Governor Perry Warjiyo revealed that the tests involved several scenarios, like a spike in the United States central bank’s federal funds rate, rising oil prices, geopolitical tension, the impact of the El Niño weather phenomenon as well as a slowdown and divergence of global economic growth.
In a separate briefing last month, Perry had forecast an economic growth divergence until 2025 that would only give way to more stability in 2026, wherein gaps among economies would widen.
