Government Should Back Up Bank Indonesia’s Rate Hike

BI’s measure to raise its benchmark interest rate by another 50 basis points to 5.25 percent on Friday is not enough. The government should support the move by accelerating domestic economic growth, especially in sectors that cannot increase foreign exchange earnings.

KOMPAS/PRIYOMBODO

The trading atmosphere at the Indonesia Stock Exchange (IDX) in Jakarta on Thursday (28/6/2018).

JAKARTA, KOMPAS — Bank Indonesia’s measure to raise its benchmark interest rate by another 50 basis points to 5.25 percent on Friday (29/6/2018) is not enough. The government should support the move by accelerating domestic economic growth, especially in sectors that cannot increase foreign exchange earnings.

In the short-term, the sector that earns the most foreign currency and can be promoted is tourism, and for the long term, the priority should be given to export-based manufacturing and import substitution businesses.