BI Governor Calls G20 Presidency to Discuss Global Monetary Policy Normalization

TEMPO.CO , Jakarta – Bank Indonesia (BI) Governor Perry Warjiyo stated that the synchronization of normalization of monetary policy at the global level has been included in the focus of discussions of the Indonesian G20 Presidency throughout 2022.

The discussion highlighted the economies of developed countries that are recovering and are preparing to normalize monetary policy, while developing countries are still in the stage of struggling to recover their economies.

This, according to Perry, is important so that the economic recovery of developing countries is not disrupted due to the normalization policy of developed countries. “These (will be discussed) what policies developing countries need so that the impact spillover global does not affect developing countries,” he said, Thursday, December 9, 2021.

Perry explained that BI will keep the interest benchmark rate low at 3.5 percent until there are signs of rising inflation. The central bank will reduce excess gradually liquidity but not interfere with the ability of banks to channel credit and purchase SBN in the secondary market.

“And also continue to conduct fiscal coordination in maintaining the stability of the rupiah exchange rate and the SBN market,” said Perry.

Furthermore, said Perry, in the G20 Indonesia Presidency, the role of the International Monetary Fund (IMF) will also be discussed in relation to the normalization of monetary policy at the global level. The role of the IMF is needed to synchronize policies between developed and developing countries.

“How can the IMF carry out policies or advice so that those who carry out normalization and those that have not run well,” he said.

On December 9th 2021, the government officially started the G20 Indonesia Presidency for the finance track, which began with the Finance and Central Bank Deputies Meeting (FCBD).

The initial meeting, said Perry, played an important role in ensuring the sustainability of the G20 leadership in supporting global economic recovery in both the short and long term. This is in line with the theme, namely ‘Recover Together, Recover Stronger’.

The main agenda of the Indonesian G20 Presidency is narrowed in 3 areas, namely inclusive health, digital transformation and energy transition. In addition to realizing equitable vaccination, Indonesia’s G20 Presidency is expected to be successful in accelerating digitization and directing global policy coordination related to climate change financing.

Perry also stated that various pandemic challenges will be discussed in the six finance track agendas of the Indonesia’s G20 Presidency in 2022.

The six agendas are, first, how the normalization of fiscal and monetary policies can support a balanced global economy without causing turmoil in financial markets.

The second agenda is how to overcome the impact of the bruising or the scaring effect of the pandemic on corporations including MSMEs, and the third is the issue of digitizing the financial economy, including the payment system.

The fourth agenda is green economy and finance, and fifth is economic and financial inclusion, and the sixth is international taxation issues. “These are global and national problems that require immediate answers from policies and are based on conceptual thinking, theory, and empirical principles,” he said.