Government Redirects Rp75 Trillion from State-Owned Banks to Routine Expenditures

Background on Liquidity Measures

The Indonesian government had previously placed significant funds in state-owned banks as part of a broader liquidity injection strategy aimed at stimulating economic growth. Initially, Rp200 trillion was placed in banks in September 2025, followed by an additional Rp76 trillion in November 2025 ²

. However, Finance Minister Purbaya Yudhi Sadewa acknowledged that this measure failed to achieve its intended impact on credit growth, which remained at around 7%, far below expectations.

Withdrawal and Reallocation of Funds

Out of the total Rp276 trillion government funds placed in state-owned banks, Rp75 trillion has been withdrawn to cover routine government expenditures. Approximately Rp200 trillion remains deposited in the banking system ²

. Purbaya emphasized that the withdrawal and subsequent reallocation through government spending would maintain economic circulation and provide a positive multiplier effect.

Challenges in Monetary-Fiscal Coordination

The liquidity injection policy faced significant challenges due to coordination issues between fiscal and monetary authorities. Purbaya noted that differing perceptions between the Ministry of Finance and Bank Indonesia regarding the timing and impact of policy execution hindered the effectiveness of the measures. This misalignment contributed to the slower-than-expected transmission of liquidity to the real sector ²

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Implications for Banking and Credit Growth

The policy's limited success was also attributed to structural issues within the banking sector. The high cost of funds remained a significant barrier, with lending rates staying elevated despite the BI rate being at 4.75%. Business associations, such as Apindo, highlighted that 43.05% of businesses complained about high lending rates, which constrained their expansion plans ²

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Future Policy Directions

To address these challenges, experts recommend a comprehensive stimulus package targeting both supply and demand sides of the economy. This includes reducing the high cost of doing business through appropriate monetary incentives and regulatory support. The government is urged to coordinate with Bank Indonesia to address issues like the practice of offering special interest rates to large depositors, which distorts market mechanisms and maintains high lending rates ²

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