Jokowi's Concerns for Indonesia's Economy and Geopolitical Situation

Editorial Team, CNBC Indonesia

Sunday, 17/12/2023 09:45 WIB

Photo: (Lukas – Presidential Secretariat Press Bureau)

Jakarta, CNBC Indonesia – Joko Widodo (Jokowi)’s term of office as president in Indonesia will end next year. At the end of his term, Jokowi expressed a number of concerns about this country.

One thing he highlighted quite sharply was the circulation of money towards the end of 2023. Bank Indonesia data shows that money in circulation in a broad sense (M2) in October 2023 only grew 3.4% on an annual basis (year on year/yoy).

This growth is the lowest in Indonesian history. The fall in money circulation was also exacerbated by the growth in local credit and third party funds (DPK).

Total deposit collection only grew 3.9% yoy to IDR 7,982.3 trillion, dominated by time deposits of IDR 2,982.9 trillion or growing 6.9% yoy in October 2023.

A significant decline occurred in DPK in Current Accounts which only grew slightly by 1.8% yoy in October. Meanwhile, in September it recorded double digit growth, to be precise, 11% yoy.

If we look in more detail, DPK in Corporate Current Accounts dropped significantly from 13.8% yoy in September to only growing 5.6% yoy in October to IDR 1,878.1 trillion.

Meanwhile, DPK in individual and other current accounts (regional governments, cooperatives, foundations and other private sectors) even contracted by 15.3% yoy and 4.8% yoy.

For the record, data compiled by CNBC Indonesia Research shows that the position of TPF growth in October 2023 was recorded as the lowest compared to since December 2016.

There are indications, said Jokowi, that this was caused by the purchase of instruments issued by the Ministry of Finance and Bank Indonesia.

“It’s possible that too much is used to buy SBN or too much is used to buy SBI or SVBI. So there will be less entry into the real sector,” he explained at the Bank Indonesia Annual Meeting (PTBI) at BI Head Office, Jakarta, quoted on Sunday. (17/12/2023)

He is worried about the drying up of liquidity in banking because it could disrupt the real sector, especially in lending. “I urge all banks to be prudent and careful, but please encourage more credit, especially for MSMEs,” said Jokowi.

At the same time, said Jokowi, the recorded realization of central and regional government spending was still low. In fact, there are only three weeks left this year.

The former mayor of Solo said that realization of central government spending only reached 76%.

“I called the Minister of Finance. I always follow things like this almost every day and I called, but I didn’t call the Governor. Later, I called the Governor to intervene. I called the Minister of Finance, what are the conditions like,” he said.

In his final briefing at PTBI, Jokowi also touched on the current geopolitical conditions.

Jokowi also described wars that occur in the world as tending to occur suddenly, without any signs at the start. This was expressed by President Jokowi at the Bank Indonesia Annual Meeting (PTBI).

“In the Ukrainian war, there was no rain, no wind, suddenly there was war, Gaza, there was no rain, no wind, suddenly there was war,” stressed Jokowi. The head of state hopes that countries wishing to go to war will be notified first.

Jokowi said that in various international meetings he attended, he often discussed the current war and its impact on the economy.

“So I always want to attend summit conferences at international meetings because I want to hear where this is going, whether the war is still long or tomorrow it could end, the impact on our economy, the impact on food in our country, what impact it will have on energy, especially with regard to prices.” said Jokowi.

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