The International Monetary Fund (IMF) assesses that Indonesia has succeeded in maintaining economic stability and the financial sector in the midst of the pandemic because it is supported by strong macroeconomic performance and a firm and comprehensive policy response. Based on an official statement from Bank Indonesia received in Jakarta on Wednesday, the results of the IMF assessment were presented in the 2021 Article IV Consultation report released on March 23, 2022. According to the IMF, the government's policies that are able to maintain economic stability include the National Economic Recovery (PEN) program and policies, accommodative monetary policy, and efforts in the financial sector to encourage credit.
The IMF's Board of Directors appreciates the various policies taken by Indonesia, including the government's commitment to gradually return the upper limit of the fiscal deficit to 3 percent by 2023. Then also about the Indonesian government's efforts on monetary policy to be ahead of the curve while still paying attention to the inflation rate. The Indonesian government's efforts to encourage the deepening and inclusion of financial markets, particularly through digitalization and measures to mitigate climate change, were also appreciated by the IMF. Not only that, the IMF also appreciates structural reform efforts in the real sector and the financial sector to increase investment, encourage growth and mitigate the scarring impact of the pandemic. In its report, the IMF views Indonesia's economic performance as continuing to strengthen in 2022-2023, driven by increased domestic demand and support for global commodity conditions. Nevertheless, the IMF is observing several risk factors that need to be watched out for, especially regarding the emergence of a new virus variant and the possible tightening of global financial conditions due to the faster-than-expected normalization of monetary policy.
Furthermore, the IMF delivered policy recommendations that are in line with Bank Indonesia's policy directions, especially regarding the normalization of liquidity policies, financial deepening, and digitalization. The IMF's positive projection is in line with the results of Bank Indonesia's assessment, which predicts that the momentum for national economic improvement will continue in 2022. Bank Indonesia is also committed to continuing to optimize the policy mix to maintain stability and support national economic recovery. Policy synergies with relevant authorities will be carried out, especially in the context of accelerating vaccination, opening up productive economic sectors and efforts to encourage increased financing in priority sectors.
