2022 State Budget and Fiscal Incentives Presentation

Further Strengthening of an Accommodative Bank Indonesia's Policy Mix BI 7-day Reverse Repo Rate Stabilization Of The Rupiah Money Market And Foreign Exchange Quantitative Easing Macro- Prudential Policy Payment System Policy . BGM 19-20 JAN 2022 1.Strengthening rupiah exchange rate policy to maintain exchange rate stability in line with economic fundamentals and market mechanisms. Normalising liquidity policy, while safeguarding the banking industry's ability to extend financing to the corporate sector and buy SBN to fund the State Revenue and Expenditure Budget (APBN) as the ratio of liquid assets to deposits is currently high at 35.12%. Normalisation will be achieved by gradually increasing rupiah reserve requirements for conventional commercial banks from the current level of 3.5% as follows: • • • 1. 150bps increase to 5.0%, with a daily requirement of 1.0% and average requirement of 4.0%, effective from 1st March 2022 2. 100bps increase to 6.0%, with a daily requirement of 1.0% and average requirement of 5.0%, effective from 1st June 2022 3. 50bps increase to 6.5%, with a daily requirement of 1.0% and average requirement of 5.5%, effective from 1st September 2022 Normalising liquidity policy by gradually increasing rupiah reserve requirements for sharia banks and sharia business units from the current level of 3.5% as follows: 1. 50bps increase to 4.0%, with a daily requirement of 1.0% and average requirement of 3.0%, effective from 1st March 2022 2. 50bps increase to 4.5%, with a daily requirement of 1.0% and average requirement of 3.5%, effective from 1st June 2022 3. 50bps increase to 5.0%, with a daily requirement of 1.0% and average requirement of 4.0%, effective from 1st September 2022 Providing reserve requirement remuneration of 1.5% for conventional commercial banks, sharia banks and sharia business units meeting the rupiah and average reserve requirements referred to in points b and c. 2.Strengthening the accommodative macroprudential policy stance in 2022 to revive bank lending to the corporate sector and drive the national economic recovery, while maintaining financial system stability. . • • Offering incentives for banks disbursing financing to priority sectors and inclusive financing and/or banks achieving the Macroprudential Inclusive Financing Ratio (RPIM) target in the form of a 100bps reduction in the daily reserve requirement, effective from 1st March 2022 Strengthening implementation of the RPIM, primarily through bank commitment to the RPIM target, based on the expertise and business models available. Maintaining accommodative macroprudential policy by holding: (a) CCyB at 0%, (b) MIR in the 84-94% range with a lower disincentive parameter of 84% from 1 Jan 22, and (c) Macroprudential Liquidity Buffer (MPLB) at 6% with repo flexibility of 6% and the sharia MPLB at 4.5% with repo flexibility of 4.5%. Strengthening prime lending rate (PLR) transparency in the banking industry with a focus on interest rate spread by bank group BGM: Board of Governor Meeting Source: Bank Indonesia 140

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