Vinnilya Huanggrio, Jakarta – Newly appointed Finance Minister Purbaya Yudhi Sadewa has made his first move by transferring Rp200 trillion from central bank reserves into commercial banks to stimulate lending and revive economic growth.
The measure comes as bank credit growth has slowed sharply, reaching just 7.03 percent year-on-year (yoy) in July, marking a five-month decline since March.
"There are around Rp 430 trillion ($26.1 billion) in government funds sitting in Bank Indonesia, inaccessible to banks," Purbaya said Wednesday after a parliamentary working meeting at the Nusantara I complex. "I will transfer Rp200 trillion into the banking system so the money can circulate and the economy can start moving again."
The funds are being placed in government accounts at commercial banks, forcing financial institutions to manage the money more actively to expand credit and reinvigorate economic activity.
"This is the first trial. We will continue until we see a significant impact on the system," Purbaya said, adding that liquidity – not just interest rates, is critical for recovery. "Even during crises when interest rates were pushed to zero, economic activity did not rebound. With sufficient liquidity, the economy has a much higher chance of picking up."
Bank Indonesia Governor Perry Warjiyo confirmed the slowdown in credit despite ample liquidity and monetary easing. "Bank credit in July 2025 grew by 7.03 percent yoy, down from 7.77 percent yoy in June," Perry said during a press briefing following the central bank's Board of Governors meeting in late August.
He noted that banks have tended to invest excess liquidity in securities rather than lending, even as public deposits rose 7 percent yoy in July. Credit demand has been supported mainly by export-oriented sectors such as mining, plantations, transport, industry, and social services, while domestic business borrowing remains weak.
Investment loans saw the highest growth at 12.42 percent yoy, followed by consumer credit at 8.11 percent yoy and working capital loans at 3.08 percent yoy. Lending to micro, small, and medium enterprises (MSMEs) remained sluggish at 1.28 percent yoy.
The government's liquidity injection aims to complement these trends, encouraging banks to expand credit, particularly for sectors that can drive broader economic growth. Bank Indonesia projects total credit growth in 2025 will reach 8-11 percent yoy.
"This is about ensuring liquidity reaches where it is most needed," Purbaya said. "With banks actively lending, we can revive the flow of money in the economy, help businesses grow, and ultimately improve public welfare."