Bank Indonesia calls for structural reform to achieve 7% economic growth

BI was on alert for inflationary pressures after the nation's inflation peaked 4.17% YoY in April.

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Aimed at boosting people's welfare, Bank Indonesia governor, Agus Martowarjodo, said an annual economic growth rate of 5% was not satisfactory to achieve its goals. Antara News quoted Agus saying that growth levels should exceed 5% and efforts to push the number up to 7%. Moreover, it was must be coupled with steps to maintain macroeconomic stability and the financial system in ways that would boost the economic growth at a higher pace.

"We know that the five percent growth is not sufficient and to achieve it, we need structural reforms, both in the fiscal and monetary sectors as well as the financial sector," he said, as reported.

"We must ensure economic growth is strong, sound, and sustainable because sound economic growth cannot be achieved if there is no macroprudential and financial system stability," he added.

While the Indonesian economy remains stable, he said the country was urged to be on alert for global economic challenges and instability. BI has been preparing itself for the global economic pressure by strengthening their macroprudential policy, while adopting new strategies like intensifying supervision.

Other strategies are: intensifying crisis management and expanding the communications and coordination with the Financial System Stability Committee and consultation with the House of Representative on mix policy.

On May 19, International Business Times reported that BI had maintained its Seven-Day Reverse Repo Rat (7DRRR) at 4.75% citing the high potential inflation and external pressures.

The move was made amid the United States Federal Reserve's plan to increase their interest rates next month.

BI said it will continue to adopt a neutral monetary policy for the first half of the year with priorities in ensuring economic stability in support of sustainable growth. The central bank aims to earmark the inflation rate this year at between 3% to 5% year-on-year (YoY).

BI was on alert for inflationary pressures after the nation's inflation peaked 4.17% YoY in April.