2022 State Budget: Fiscal Policy and Structural Reform

Bank Indonesia's Policy Mix Synergy to Accelerate Economic Recovery, while Maintaining Macroeconomic and Financial System Stability Maintaining accommodative monetary policy stance (lowering policy rate 125bps in 2020, and 25ps in February 2021) Maintaining rupiah exchange rate stabilization policy in line with the currency's fundamental value and market mechanisms • Strengthening the monetary operations strategy to reinforce the accommodative monetary policy stance Focusing on the quantity channel by providing liquidity to stimulate economic recovery Monetary Policy Controlling inflation through Inflation Control Team in national and regional level Supporting the State Budget through SBN purchases in the primary market in line with Act No. 2/2020, while maintaining macroeconomic stability ● Supporting national economic recovery program in cooperation with the MOF ● Promoting lower lending rates through close supervision and public communication in coordination with OJK ⚫ Strengthening policy coordination with the Government and Financial System Stability Committee to maintain macroeconomic and financial system stability 1m Macro- prudential Policy Coordination with other Authorities 5 B BANK INDONESIA BANK SENTRAL REPUBLIK INDONESIA 3 4 Financial Market Deepening Payment System Policy Strengthening money market deepening by expanding underlying DNDF to boost liquidity and reinforce JISDOR as a reference for exchange rate setting in the forex market • Accelerating infrastructure development, including Electronic Trading Platforms (ETP) as well as a Central Counterparty (CCP) Developing Money Market Development Blueprint 2025 Strengthening accommodative macroprudential policy to stimulate growth of loans / financing allocated to priority sectors, incl. SMEs, and inclusion of export L/C as a financing component to stimulate bank lending to the corporate sector and export-oriented businesses Refining the MSME credit ratio into the Macroprudential Inclusive Financing Ratio (RPIM) by expanding the scope of bank partners to disburse inclusive financing as well as through inclusive financing and other business models securitisation Accommodative macroprudential policy stance by: Relaxing the Loan / Financing-to-Value (LTV / FTV) ratio on housing loans/financing Relaxing down payment requirements on automotive loans /financing Holding the countercyclical buffer (CCB) at 0% Macroprudential Intermediation Ratio (MIR) in the 84-94% range Macroprudential Liquidity Buffer (MLB) at 6% with 6% repo flexibility, and the sharia Macroprudential Liquidity Buffer (SMLB) at 4.5% with repo flexibility at 4.5% Relaxing credit card policy Accelerating digital transformation payment system policy and faster implementation of Indonesia Payment System Blueprint 2025 Strengthening and expanding electronification: Social program, e-payment for Government Extending the 0% QRIS merchant discount rate (MDR) for micro merchants until 30th June 2022 to maintain QRIS acceptance and uptake as well as industry sustainability Implementing the first phase of BI-FAST, starting in the second week of December 2021 Source: Bank Indonesia 137

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