The global economy is showing strength, but recovery is still slow and uneven. Current global activity has still not returned to pre-pandemic levels.
There are also growing divergences in growth in various regions as well as challenges that continue to emerge starting from the long-term consequences of Covid-19, the war in Ukraine and increasing geoeconomic fragmentation, the impact of tight monetary policy in order to overcome inflationary pressures, reduced fiscal stimulus due to rising debt levels. is already high, as well as the implications of extreme weather.
This was expressed by the Governor of Bank Indonesia Perry Warjiyo who attended the series of Annual Meetings of the International Monetary Fund and World Bank (IMF-World Bank), including the fourth meeting of the Minister of Finance and Governors of the Central Banks of the G20 countries (FMCBG).
He and the Minister of Finance Sri Mulyani Indrawati attended the event which was held on 10-15 October 2023 in Marrakech, Morocco.
Facing complex economic conditions, in a series of meetings, Perry Warjiyo encouraged the use of a central bank policy mix that does not rely on one policy instrument alone but combines various policies, namely interest rate policy, macroprudential policy and exchange rate stability policy, as well as explaining Indonesia’s strategy in facing inflationary pressures originating from the supply side and demand side with strong coordination between the monetary and fiscal authorities.
He also highlighted the importance of efforts to overcome fragmented global conditions with various efforts, including opening up investment opportunities, downstreaming to increase the added value of natural resources, and continuing to encourage the development of MSMEs by developing cross border payments (CBP) to increase the connectivity of MSMEs with wider markets. .
In response to these global conditions, Perry said, the Ministers of Finance and Central Bank Governors would soon agree on a Global Policy Agenda which raised the theme of building shared prosperity and resilience (Building Shared Prosperity and Collective Resilience).
In an effort to maintain stability and improve prosperity, policymakers are expected to focus on returning inflation to target, maintaining financial stability, rebuilding fiscal buffers, and encouraging sustainable and inclusive medium-term growth.
Furthermore, as an effort to strengthen collective resilience, the IMF conveys the need for joint efforts to strengthen the global financial safety net to help member countries in need as well as strengthening the IMF’s capacity in providing surveillance, financing and providing relevant technical assistance to member countries.
Furthermore, at the G20 meeting which will take place soon, the Finance Ministers and Central Bank Governors of the G20 countries are scheduled to discuss various challenges arising from the uneven and divergent economic prospects with the challenges of high core inflation, the burden of interest payments on loans from poor countries, increases, as well as extreme weather events, leading to limited policy space, especially for low- and middle-income countries.
Furthermore, Perry said that the G20 countries would also discuss topics related to the potential and risks of Crypto assets for macroeconomic and financial stability and efforts to overcome them. To address these various challenges, G20 countries are committed to encouraging improvements for the welfare of society at large, including by emphasizing the importance of continuing efforts to improve sustainable finance, cross-border payment systems and inclusive finance.
“As a form of international solidarity to help low-income countries and the commitment of G20 members, Bank Indonesia expressed its ability to support the IMF program for poverty alleviation (Poverty Reduction and Growth Trust – PRGT) by providing a contribution to the program of SDR 26 million which will be met from proceeds interest on Bank Indonesia deposits placed with the IMF,” said Perry.
This assistance aims to help low-income countries achieve economic stability in order to reduce poverty, which is provided, among others, to African countries as well as several member countries of the South East Asia Voting Group (SEAVG) constituency such as Laos, Tonga and Nepal, of which Indonesia is a member.
According to him, it is hoped that this contribution will show Indonesia’s role in increasing the resilience of the global economy, which in the end has the potential to have a positive impact on the national economy.
Source : CNBC