Bank Indonesia (2025) — Macroprudential Policy Report Q4 2024

 

Jakarta, Indonesia – Bank Indonesia (BI) has reaffirmed its commitment to maintaining financial system stability while supporting sustainable economic growth through an accommodative macroprudential policy stance. In its Macroprudential Policy Report for the Fourth Quarter of 2024, released in early 2025, the central bank highlighted the resilience of Indonesia's financial sector despite ongoing global economic uncertainty and geopolitical risks.

According to the report, Indonesia's banking system remained sound throughout the fourth quarter of 2024, supported by strong capital adequacy, adequate liquidity, and improving credit growth. Bank Indonesia emphasized that macroprudential policies continued to play a crucial role in balancing financial stability with the need to stimulate productive lending to businesses and households. The central bank maintained an accommodative macroprudential stance to encourage financing for priority sectors, including micro, small, and medium-sized enterprises (MSMEs), green finance, and labor-intensive industries.

The report notes that credit growth remained positive, reflecting stronger domestic demand and improving business confidence. Bank Indonesia also highlighted the effectiveness of its Macroprudential Liquidity Incentive (KLM) program, which provides liquidity incentives to banks that expand lending to productive sectors. The policy aims to strengthen financial intermediation while ensuring that banks continue to apply prudent risk management practices.

Despite favorable domestic conditions, Bank Indonesia warned that external challenges continue to pose risks to Indonesia's financial system. Higher-for-longer global interest rates, geopolitical tensions, exchange rate volatility, and slower global economic growth remain key sources of uncertainty. These external pressures require policymakers to maintain vigilance and strengthen coordination between monetary, macroprudential, and payment system policies to safeguard macroeconomic and financial stability.

To enhance the effectiveness of macroprudential policy, Bank Indonesia continued strengthening its regulatory framework through a more integrated and forward-looking approach. The central bank emphasized that macroprudential policy should not only mitigate systemic risks but also promote financial inclusion, support sustainable finance initiatives, and improve the resilience of Indonesia's banking sector against future economic shocks. This approach aligns with Bank Indonesia's broader policy mix designed to achieve stable inflation, maintain exchange rate stability, and foster sustainable economic growth.

The report concludes that Indonesia's financial system entered 2025 from a position of relative strength. Nevertheless, Bank Indonesia stressed that maintaining financial resilience will require continued policy coordination, prudent supervision, and adaptive macroprudential measures capable of responding to rapidly evolving domestic and global economic conditions. As financial markets become increasingly interconnected, the central bank believes that macroprudential policy will remain a key instrument in preserving financial stability while supporting inclusive and sustainable economic development.