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Jakarta Post

Fiscal-monetary teamwork

  • Editorial board

    Jakarta

Jakarta   /   Wed, July 8 2020   /  09:26 am
Counting the cost: Finance Minister Sri Mulyani (second left) talks with the Financial Services Authority’s board of commissioners chairman Wimboh Santoso (left), Bank Indonesia Governor Perry Warjiyo (second right) and Indonesian Deposit Insurance commissioner Destry Damayanti after addressing the media on economic conditions in Jakarta on Thursday. (Antara/Galih Pradipta )

The agreement between the Finance Ministry and Bank Indonesia (BI) on Monday to share the financial burdens of handling the COVID-19 outbreak and its devastating impacts will significantly strengthen market confidence in Indonesia’s macroeconomic management. The burden sharing will also further strengthen the good teamwork between the fiscal and monetary authorities, which have consistently demonstrated good cooperation and coordination in policy making and implementation since the moment the country began to feel the brunt of the outbreak in early March. Burden sharing has become an imperative, as the government has significantly increased spending, which is expected to raise the fiscal deficit to an estimated 6.3 percent of gross domestic product this year. This in turn will force the government to borrow much more, thereby resulting in estimated total debt-interest costs o...