Inflation Control and Financial Facilities Strategy
Bank Indonesia Policy Mix: April 2020
Mitigating the risk of COVID-19 transmission
B BANK INDONESIA
BANK SENTRAL REPUBLIK INDONESIA
As a follow-up measure to strengthen monetary and financial market stability in conjunction with the Coordinating
Ministry of Economic Affairs, Ministry of Finance, Indonesian Financial Services Authority (OJK) and Deposit Insurance
Corporation (LPS), the Governor of Bank Indonesia, Perry Warjiyo, on April 1st 2020 delivered The policy mix implemented
by Bank Indonesia to mitigate the COVID-19 impact is as follows:
Bank Indonesia also backs promulgation of the Government Regulation in Lieu of Law in order to relax prevailing laws to
mitigate the COVID-19 impact as an anticipatory measure in conjunction with the Government, OJK and LPS. COVID-19
handling requires extraordinary measures, unconventional policies and policies that exceed previous jurisdiction.
To that end, Bank Indonesia has reiterated its authority in accordance with Government Regulation in Lieu of Law (Perppu) No.
1 of 2020 as follows:
1) Expansion of Bl authority to purchase long-term government securities (SBN) and government Islamic securities (SBSN) in the
primary market in order to assist the Government finance the handling of the COVID-19 impact on financial system stability.
2) SBN will be purchased in the primary market by Bank Indonesia as a last resort if the market is unable to fully absorb the
SBN issued by the Government. Further provisions will be regulated in conjunction with the Minister of Finance and the
Governor of Bank Indonesia based on the following considerations: financial market conditions and the impact on inflation.
3) As an anticipatory measure, Bank Indonesia will purchase repo securities held by the Deposit Insurance Corporation (LPS) in
order to finance the handling of solvency issues at systemic and non-systemic banks;
4) Provision of short-term liquidity loan or short-term liquidity financing facilities in compliance with sharia principles to systemic
and non-systemic banks;
5) Foreign exchange flow management for residents. The use of foreign exchange by residents, including provisions for the
surrender, repatriation and conversion of foreign exchange to maintain macroeconomic and financial system stability as
follows:
6) Bank Indonesia would like to stress that this measure is not a form of foreign exchange control but policy to manage foreign
exchange applicable only to residents (excluding non-residents/foreign investors). Foreign portfolio investment and foreign
direct investment (FDI) are still required for the Indonesian economy, thus existing policy permitting the free flow of foreign
exchange by foreign investors remains effective.
7) Regulating foreign exchange amongst residents is consistent with international prudential principles for macroeconomic 119
management particularly under economic distress such as the current COVID-19 pandemicView entire presentation