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BI anticipates higher demand for cash ahead of year-end holidays and election
BI Deputy Governor Doni Primanto Joewono said the cash supply would prevent cash insufficiency during the busy seasons.
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All about money: A teller shows her customer rupiah bank notes on Oct. 30, 2023 at Bank BSI in Jakarta. The Indonesian currency fell to 16,000 against the United States dollar because of various external pressures.
(Antara/Muhammad Adimaja)
Bank Indonesia (BI) has prepared a supply of cash to meet the public's needs for the upcoming holidays, including Christmas and New Year, as well as the general election and the Idul Fitri holiday in the first quarter of 2024.
BI Deputy Governor Doni Primanto Joewono said the cash supply would prevent cash insufficiency during the busy seasons.
"We have begun the distribution [to commercial banks], which we call front-loading, and this will continue for the next five months," Doni said on Thursday, as quoted by detikFinance. He did not disclose the amount of cash that would be distributed.
Read also: BI maintains rates amid stable inflation outlook
Doni said the central bank predicted that the demand for cash would increase by 6 to 8 percent in the next five months due to the confluence of the major events. This prediction is based on observations from the 2014 and 2019 general elections, which also coincided with Ramadan fasting month and Idul Fitri.
Previously, economist and former finance minister Chatib Basri estimated that the amount of money that would be in circulation during the presidential election, which will be held on Feb. 14, could reach Rp 2.4 trillion (US$154.07 million) in one day. This projection stems from the anticipation that each political party will spend up to Rp 240 billion to mobilize their members and supporters to head to the polling stations (TPS).
Chatib added that the upcoming election may be able to boost national economic growth back up to above 5 percent, from 4.9 percent in the third quarter of 2023.
According to BI, money supply (M2) growth in October 2023 reached 3.4 percent year-on-year (yoy). This growth was fueled by robust increases in quasi-money (7.8 percent yoy) and currency (6.7 percent yoy). The money supply growth is also supported by government expenditure.
