Gov’t Places State Funds at State-Owned Banks to Speed up Economic Recovery, Boost Real Sector

Finance Minister gives a press statement at the Presidential Office, Jakarta, Wednesday (24/6). (Photo by: Agung/PR)

The Government has announced it will place Rp30 trillion in state funds in the association of state-owned banks (Himbara) aimed to speed up national economic recovery as the country is reeling from the COVID-19 pandemic.

According to Minister of Finance Sri Mulyani, the measure is in accordance with Government Regulation in Lieu of Law (Perpu) Number 1 of 2020 which now becomes Law Number 2 of 2020 on National Economy Recovery and Government Regulation Number 23 of 2020 on Implementation of the National Economic Recovery Program.

The Minister has also issued Regulation of Minister of Finance Number 70 of 2020 on Placement of State Money in State-Owned Banks to Speed up National Economic Recovery.

“This is an amendment to Regulation of Minister of Finance Number 3/PMK05 of 2014 on the placement of state money and the placement of state money in state-owned banks that we have routinely done since 2014,” the Minister said in a press statement, Wednesday (24/6).

According to Sri Mulyani, the President and his cabinet ministers continue to evaluate and identify policies to speed up national economic recovery.

“Given that the country’s economy is seeing a sharp drop particularly in the past April-May, it is crucial for us to establish policies to rebuild the economy,” the Minister said.

As for the legal basis for placing funds in state-owned banks, the Minister continued, it is regulated in Law Number 1 of 2004 on State Treasury, Law Number 2 of 2020 on National Economy Recovery, and Government Regulation Number 39 of 2007 on Management of State/Regional Funds.

To that end, the Minister said she has sent a letter to Governor of central bank Bank Indonesia (BI) to transfer currently deposited government funds at the central banks to state-owned banks.

“The measure, as President Joko “Jokowi” Widodo said, is expected to boost the economy and to recover the real sector so banks continue to speed up providing credit and provide various schemes for economic recovery in the real sector,” she said.

The funds may not be used by the banks to buy government securities and for foreign exchange transactions or purchases, she added.

The Minister also pointed out that the funds are specifically allocated to boost real sector economy.

On that occasion, the Minister also said she will enter into a cooperation agreement with the CEOs of Himbara and her Ministry is represented by Director General of Treasury.

“The President has earlier ordered Minister of SOEs to monitor and evaluate the use of the funds to boost the real sector every three months,” she said, adding that the Government will put in place a fund placement mechanism at state-owned banks in deposit accounts with interest rates of 80 percent of the central bank’s benchmark interest rate of 4.25 percent.

“We hope this low interest rate will encourage state-owned banks to channel the loans to entrepreneurs at lower interest rates,” the Minister said. (TGH/EN)

Translator: Muhardi
Reviewed by: M. Ersan Pamungkas