Indonesian government plans to place funds in state banks to provide liquidity
The initiative aims to support President Prabowo Subianto's more than 80,000 village cooperatives and drive economic growth to 8% from the current 5%, Indrawati told reporters.
The four banks are Bank Rakyat Indonesia (BBRI.JK), opens new tab, Bank Negara Indonesia (BBNI.JK), opens new tab, Bank Mandiri (BMRI.JK), opens new tab and Bank Syariah Indonesia (BRIS.JK), opens new tab, Indrawati said.
"This enables the four banks to provide loans to village cooperatives at a low interest rate of 6%," she said.
Size of the fund placement is still being discussed within the government, but they will consider the size of total loan demand from the cooperatives, Febrio Kacaribu, a senior official at the ministry, told reporters separately.
The village cooperatives programme was launched last week and the government has said that each of the cooperatives could apply for a loan to the state banks up to 3 billion rupiah ($183,655).
($1 = 16,335.0000 rupiah)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Times
7 hours ago
- Times
Andrew Bailey blocks Rachel Reeves's meeting with Revolut
The Bank of England governor blocked Rachel Reeves from intervening in the regulation of financial technology giant Revolut in a sign of fresh tensions between the government and City supervisors. The chancellor had been trying to organise a meeting between Revolut, the Treasury and the Bank's Prudential Regulation Authority division in recent weeks to discuss the fintech company's plans to start a banking business in Britain. However, the meeting was scrapped at the behest of Andrew Bailey, the governor, over worries it represented political interference in the Bank's independent oversight of the City. The incident, which was first reported by the Financial Times, adds to evidence of a growing rift between the Treasury and Britain's regulators. • Pound weakens to lowest in three months against dollar Reeves has placed cutting red-tape on the financial services sector and other industries at the heart of her mission to turbocharge the UK's faltering economy and has blamed over-cautious watchdogs for holding back growth. This month she set out a package of reforms to loosen the rules on financial firms and also used strident language to urge watchdogs to go further, claiming in a speech to City grandees at Mansion House that 'in too many areas, regulation still acts as a boot on the neck of businesses, choking off the enterprise and innovation that is the lifeblood of economic growth'. Bailey has signalled his unease with Reeves's comments, however. When asked by MPs on the Commons treasury committee last week about the chancellor's 'boot' remark, the governor said: 'I don't use those terms, let me say that'. He also warned that 'we cannot compromise on basic financial stability, that would be my overall message'. The privately-owned Revolut is seen as the crown jewel of Britain's fintech industry. Founded only a decade ago as a foreign exchange and money transfer business, it has become a sprawling company offering everything from crypto trading to share dealing. It was recently valued at $45 billion, employs more than 10,000 staff and last year generated pre-tax profits of £1.1 billion. Yet its growth ambitions have been hampered by the Bank's caution in granting it a banking licence. The London-based group first applied for a UK licence in early 2021 but a process that typically takes 12 months lasted more than three years for Revolut. The delay was partly caused by questions about the company's accounts after BDO, which is the fintech's group's external auditor, raised concerns in Revolut's 2021 annual report about £477 million of Revolut's £636 million in annual revenues that year. This issue has since been resolved, paving the way for Revolut to secure a licence a year ago. However, it has yet to start its banking business here because it is not fully approved by the Bank. Instead it currently has restricted authorisation, which effectively only allows it to build and test its systems. It already offers some banking services in the European Union thanks to a licence it has from Lithuanian authorities.
Telegraph
7 hours ago
- Telegraph
Milei-style shock therapy may be needed to save Britain from fiscal disaster
The Office for Budget Responsibility's latest report on UK finances paints a grim picture. Economic growth has flatlined, unemployment has risen to 4.7pc – the highest since early 2021 – inflation stubbornly lingers at 3.6pc and government spending is spiralling out of control. Every household understands a simple rule: you must earn more than you spend, or eventually hit the rocks. Yet the UK has long been living beyond its means, maxing out its credit card. For the year ending April 2025, borrowing reached £148bn – a staggering 70pc higher than the £87bn forecast in March 2024. Debt levels are now at heights not seen since the post-Second World War era, and once again, taxpayers are being asked to foot the bill. Worse still, the Government shows no sign of reining in expenditure. The Chancellor is widely expected to announce new tax hikes in the autumn. And when implemented, the real damage will have already occurred following months of speculative debate – 'will-we-won't-we' tax rises that create uncertainty and undermine confidence, dampening economic activity before any policy is even introduced. Those advocating further tax increases misunderstand basic economics, what people need and how to get the best out of them. Beyond a certain point, higher taxes reduce revenue by curbing economic activity – a lesson all too familiar amid rising employer National Insurance contributions, minimum wage increases, and other cost pressures. Businesses across the country are already shedding jobs, particularly among lower-paid workers feeling the squeeze. We may well have passed the point of optimal taxation. Yet instead of easing the burden, the Government whispers about even more tax, including proposals for a wealth tax. This would be disastrous, as the wealthiest 1pc already are estimated to contribute roughly 28pc of income tax. Imposing a wealth tax risks driving more mobile top earners away. As Walter Wriston, the late chairman and chief executive of what was Citicorp, once said: 'Capital goes where it is welcome and stays where it is well treated.' The UK, like many European nations, has lived beyond its means for too long. Month after month, deficits grow. The yield on the UK's 30-year government bond recently topped 5.5pc – far above the 4.85pc seen in October 2022 – reflecting investor wariness. The Bank of England has been forced to adjust and review its quantitative easing reversal following pressure from investors. Political will to cut spending appears scarce. Parliament's handling of the welfare reform bill signals that no meaningful spending reductions will occur, meaning taxpayers will again bear the cost. The debate narrowly focused on trimming a few billion pounds, when the circumstances call for far deeper cuts. And nobody asks how to deliver better public services for less or how it can be fair that taxpayers fund ever-expanding budget black holes. The UK has become addicted to the notion that government should expand its role endlessly – that bigger government automatically means a better society. As a result, spending cuts are politically toxic: the knee-jerk response to every problem is to raise taxes to fund more spending. This is more than policy – it's philosophical, big state versus small state. To say 'I'm from the government, and I'm here to help' remains as dangerous as ever. Borrowing is set to rise significantly over this parliament, even as growth falters. Despite the rhetoric of engineering growth in the economy, the UK faces the prospect of a smaller economy at the end of this parliament. The only way out is to grow the economy. Real, sustained economic growth reduces debt-to-GDP ratios over time and generates the tax revenues needed to fund essential services. Achieving this requires a hard balancing act: cutting spending, committing to fiscal discipline, slashing burdensome regulation, scrapping costly and anti-growth policies like net-zero mandates, and lowering taxes over time. The UK simply cannot rely on ever-higher tax-takes to bail out unchecked spending. We might start to look to Argentina for a solution. Once an economic basket case with inflation soaring over 200pc and poverty affecting more than 40pc of its population, Argentina has faced nine sovereign defaults since independence, caused by persistent fiscal deficits in 57 of the past 65 years. Over half the population relied on government transfers in 2022. Then came Javier Milei, a political outsider who was not expected to win Argentina's 2023 presidential election. Upon victory, he declared bluntly, 'there is no money', and since taking office, Milei has worked aggressively to balance the budget. While many economists initially derided his approach, it is now bearing fruit. Argentina's economy is forecast to grow over 5.7pc this year. Inflation has dropped to 1.6pc monthly as of June, and poverty has fallen significantly – Unicef estimates 1.7 million children have been lifted out of poverty since Milei assumed power. Milei's diagnosis is clear: 'The public sector is the illness. If a body has a virus, a germ, a bug, a parasite, you extract the parasite – you don't feed it. If you feed the parasite, you end up worse off. We got the state out of the way, and things are working better.' Fiscal discipline, slashed public spending, ending monetary financing of deficits, and deregulation have shrunk the state dramatically. These measures are not without pain, with over 50,000 public sector workers laid off, government departments merged or closed, infrastructure spending frozen, and energy and transport subsidies cut. But the result is a state budget surplus and a transformed economy – all within 18 months. Being fiscally responsible also means attracting investment. If the UK is seen as a balanced, prudent economy living within its means, capital will flow in. Right now, the notion that the UK is poised for a global investment bonanza is wishful thinking. To fix the UK's economy and become an attractive destination for investment, we must balance our books. Like Argentina, we need a complete reset – a new philosophy and a radically different approach. This will require an honest conversation with the public about 'there is no money,' and a commitment to sustainable spending plans aligned with growth and fairness. Failing to act risks the UK ending up in the hands of the IMF – a fate best avoided.
Reuters
8 hours ago
- Reuters
Hungary's government slashes 2025 growth forecast to 1%
BUDAPEST, July 29 (Reuters) - Hungary's government slashed its 2025 economic growth forecast to 1% on Tuesday from 2.5% expected at the start of the year, prolonging an anaemic recovery from an inflationary surge triggered by Russia's 2022 invasion of Ukraine. Prime Minister Viktor Orban's government had hoped a rebound in economic growth would help him secure another term in next year's elections, when political analysts expect him to face the stiffest opposition challenge in over a decade. But the economy remained flat in the first quarter, worse than expectations, and the performance in the second quarter was likely to have been similar, Economy Minister Marton Nagy said, weighed down by agriculture and industry. "On a quarterly basis, growth will likely be positive, but in annual terms, we can expect near stagnation," Nagy told a media briefing, adding that weak farm sector output had probably cut between 0.3 and 0.4 of a percentage point off growth. The new forecast is more closely aligned with the Hungarian central bank's 0.8% projection and the OECD's 0.9% estimate, rounding off the weakest three-year stretch leading up to a national election since Orban took power in a 2010 landslide. Orban aims to fend off the opposition challenge with large-scale tax cuts for families, cheap loans to first-time home buyers and pension rises due to higher-than-expected inflation, now seen averaging 4.7% this year. Nagy said Sunday's U.S.-EU framework trade agreement would reduce uncertainty, adding that he believed the car sector would be able to absorb a 15% tariff rate. Neighbouring Romania has said it expected a small hit to growth from tariffs. Despite the weaker economic performance, Nagy said there was no need to amend the 2025 budget, as consumption-linked tax revenues were on track and as the government had already implemented a spending freeze earlier this year. Orban's government targets a shortfall worth 4.1% of output this year, down from a higher-than-forecast 4.9% level in 2024. Hungary's debt, the EU's highest outside the euro zone, is expected to stagnate at around 74% this year and next. Nagy said the government was committed to keeping the deficit below 4% of economic output next year, adding however, that 192 billion forints ($555.59 million) worth of reserves would be needed to cover risks from lower-than-expected growth. ($1 = 345.58 forints)
