Government Takes Strategic Steps to Stimulate National Economic Equality
By: Marissa Stefanny )*
The Indonesian government continues to strive to encourage national economic equality through various strategic steps. With President Prabowo Subianto’s target of achieving economic growth of 8% during his administration, the big challenge faced is to escape the trap of economic growth of around 5% that has persisted for more than a decade. To that end, the government needs a comprehensive approach and strong synergy between institutions, including Bank Indonesia (BI).
The projection of Indonesia’s economic growth in 2025 is estimated to be in the range of 4.7%-5.5%, with a midpoint of 5.1%. Although this figure has not reached the government’s ambitious target, the increasing trend is projected to continue in the coming years. BI is optimistic that with the right policies, economic growth can increase in 2026 to the range of 4.8%-5.6%. This optimism is based on various factors, including macroeconomic stability, controlled inflation, and monetary policies that support growth.
One of the important steps taken by BI to encourage growth is to lower the benchmark interest rate or BI-Rate by 25 basis points to 5.75% in early 2025. This policy is expected to encourage economic activity, especially by increasing the distribution of more affordable credit for the community and business actors. The reduction in the BI-Rate was carried out by considering the inflation conditions which remain under control within the target of 2.5% plus minus 1%, as well as the stability of the rupiah exchange rate which continues to be maintained.
BI Governor Perry Warjiyo said that BI is also paying special attention to the banking sector to ensure the availability of sufficient liquidity to support economic growth. Until mid-January 2025, BI noted that the macroprudential liquidity incentives (KLM) that had been distributed reached IDR 295 trillion.
These funds are focused on supporting priority sectors that are considered to have a significant impact on economic growth. With this policy, banks are expected to be able to increase credit distribution to various productive sectors, including micro, small and medium enterprises (MSMEs), which are the backbone of the national economy.
In terms of digitalization, the government is also encouraging the acceleration of digital transformation in various sectors. This step is considered important to increase Indonesia’s economic competitiveness in the era of globalization. Digitalization not only provides benefits in terms of business process efficiency, but also opens wider access for business actors to reach the global market. BI projects that credit growth in 2025 can reach 11%-13%, in line with the acceleration of digitalization and economic stability that continues to be maintained.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, explained that Indonesia is utilizing artificial intelligence (AI) in various fields, including Industry 4.0 manufacturing, health sector development, blockchain, machine learning, and various other productive sectors to drive economic growth according to President Prabowo’s target of 8%. The digital sector offers significant non-linear growth opportunities. Therefore, a big leap is needed that can only be achieved through digitalization, utilization of AI, and increased productivity by relying on the digital economy.
However, the government remains aware of various global dynamics that can affect the domestic economy. Geopolitical uncertainty, commodity price fluctuations, and changes in monetary policy in developed countries are some of the external challenges that must be anticipated. Therefore, the economic policies taken by the government are based on the principle of prudence and responsiveness to changes in the global situation.
Optimism towards national economic growth cannot be separated from the synergy between the government and various other stakeholders. The government continues to monitor the monetary policy space that can be used to encourage growth, including the potential for further interest rate cuts if economic conditions are supportive. Stability of inflation and the rupiah exchange rate are also top priorities in maintaining economic balance.
On the other hand, the government continues to strengthen fiscal policy to support economic stimulus. Investment in the infrastructure, education, and health sectors are top priorities in increasing the competitiveness and quality of Indonesia’s human resources. With the support of integrated fiscal and monetary policies, the government is optimistic that higher economic growth targets can be achieved in the next few years.
