Indonesia: The economy could collapse if the corporate and financial sectors slumped for too long

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Minister of Finance Sri Mulyani Indrawati said the Indonesian economy could collapse if the corporate and financial sectors slumped for too long. Therefore, extra efforts need to be made to revive these two sectors.

According to misiiter, these two sectors are very important in encouraging credit growth, which is currently contracting quite deeply. This is because credit growth is needed to drive the economy, which has also contracted due to the Covid-19 pandemic. The current situation must return or work on how the financial and corporate sectors can again do business prudently but must start to recover. Because if he faints for too long the economy will also collapse minister said through a virtual webinar, Tuesday.

One way to restore the two sectors is to have the courage to start giving and taking credit. Where the financial sector provides credit and corporations take credit.

Minister said. it must be both. If one does not take credit and the other does not dare to give credit, the economy will collapse.

With this situation, he emphasized that the role of the Financial System Stability Committee (KSSK) is very much needed to encourage economic recovery. In this case, the government provides tax incentives for businesses as well as credit relaxation or not paying credit, especially for MSMEs for up to 9 months. This is done together with the Financial Services Authority (OJK). In addition, the Government also provides working capital loan guarantees so that the financial services sector, especially banks will dare to provide loans.

Minister said, this policy extraordinary, the dilemma of protection vs. moral hazard, must be calculated between the need for economic recovery and on the other hand, the possibility of crime or moral hazard must be considered.