Jakarta: Bank Indonesia (BI) said its liquidity support measures and government incentives for micro, small, and medium enterprises (MSMEs) would help cushion the impact of higher borrowing costs following the recent increase in the benchmark BI-Rate. BI Senior Deputy Governor Destry Damayanti noted that the central bank's macroprudential policies and ample banking liquidity would help ensure that the higher interest rate environment does not become overly burdensome for MSMEs.
According to BERNAMA News Agency, Destry Damayanti stated during the National Conference on Regional Economic Development that support for MSMEs would continue through various government programs offering incentives and stimulus measures for MSMEs and low-income groups. She explained that BI continues to implement macroprudential policies by providing incentives through reductions in reserve requirements for banks that channel loans to priority sectors, including MSMEs.
Under the Macroprudential Liquidity Incentive Policy, banks had received incentives amounting to 424.7 trillion rupiah as of the first week of May 2026. Destry highlighted that these incentives were reinforced following the BI-Rate increase, including efforts to manage the spread between the BI-Rate and lending rates to ensure borrowing costs remain relatively controlled. She clarified that funds amounting to more than 400 trillion rupiah, which should have been held by the banks, were returned to BI in the form of reserve requirements but were subsequently returned to the banks, ensuring they continue to have ample liquidity.
During its May 19-20 Board of Governors Meeting, Bank Indonesia raised the benchmark BI-Rate by 50 basis points to 5.25 percent, marking the first rate adjustment after maintaining the rate at 4.75 percent since September 2025. Destry emphasized that the decision to raise the BI-Rate was due to global conditions characterized by a 'higher-for-longer' environment, with rising United States bond yields, persistently high inflation, and a strengthening US dollar index against nearly all major currencies.
She stressed the increasing importance of exchange rate stability, warning that without policy adjustments, pressure on the rupiah could intensify further, particularly from portfolio capital outflows.