Bank Indonesia sees MSMEs Supported Despite Higher Bi-rate
JAKARTA, May 25 (Bernama) -- Bank Indonesia (BI) said its liquidity support measures and government incentives for micro, small and medium enterprises (MSMEs) would help cushion the impact of higher borrowing costs following the recent increase in the benchmark BI-Rate.
BI Senior Deputy Governor Destry Damayanti said the central bank’s macroprudential policies and ample banking liquidity would help ensure that the higher interest rate environment does not become overly burdensome for MSMEs.
“If interest rates rise but liquidity remains ample, I believe the increase will not become more burdensome for MSMEs,” she said during the National Conference on Regional Economic Development on Monday, according to ANTARA News Agency.
Destry said support for MSMEs would continue through various government programmes offering incentives and stimulus measures for MSMEs and low-income groups.
She explained that BI continues to implement macroprudential policies by providing incentives through reductions in reserve requirements for banks that channel loans to priority sectors, including MSMEs.
Under the Macroprudential Liquidity Incentive Policy, banks had received incentives amounting to 424.7 trillion rupiah (1 Mln rupiah = RM222.6) as of the first week of May 2026.
According to Destry, the incentives were also strengthened following the BI-Rate increase, including through efforts to manage the spread between the BI-Rate and lending rates to ensure borrowing costs remain relatively controlled.
“There are actually funds amounting to more than 400 trillion rupiah that should have been held by the banks but were returned to BI in the form of reserve requirements.
“Those funds are not retained by BI; they are returned to the banks. Therefore, banks continue to have ample liquidity,” she said.
During its May 19-20 Board of Governors Meeting, Bank Indonesia raised the benchmark BI-Rate by 50 basis points (bps) to 5.25 per cent. The decision, announced on May 20, marked the first rate adjustment after the benchmark rate had been maintained at 4.75 per cent since September 2025.
Destry said BI had to raise the BI-Rate due to current global conditions characterised by a “higher-for-longer” environment, with rising United States bond yields, persistently high inflation and a strengthening US dollar index (DXY) against nearly all major currencies.
She stressed that exchange rate stability had become increasingly important, warning that without policy adjustments, pressure on the rupiah could intensify further, particularly from portfolio capital outflows.
-- BERNAMA