Republic of Indonesia Financial Sector Assessment
Indonesia has exhibited strong macroeconomic performance, but developmental needs remain significant. To raise the living standards of a large population dispersed over thousands of islands, Indonesia must address several key challenges, including...
| Main Authors: | , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/104191505745150824/Indonesia-Financial-Sector-Assessment http://hdl.handle.net/10986/28391 |
| Summary: | Indonesia has exhibited strong
macroeconomic performance, but developmental needs remain
significant. To raise the living standards of a large
population dispersed over thousands of islands, Indonesia
must address several key challenges, including a sizeable
infrastructure gap, relatively low productivity, and rising
inequality. The authorities recognize that the financial
sector needs to play a central role in overcoming such
challenges. The authorities have been pursuing an ambitious
agenda to promote financial sector deepening and to
strengthen financial oversight and crisis management.
Despite substantial progress since the last FSAP, the
financial sector is not yet sufficiently able to fund
development needs or boost inclusive economic growth. To
promote sustainable financial sector deepening and
inclusion, the authorities could consider a more
coordinated, cross-cutting approach by addressing root
causes. To promote inclusive economic growth and strengthen
financial markets, the authorities pursue a diverse policy
mix which includes: expansion of the KUR credit guarantee
program with an interest subsidy add-on; a deposit interest
rate ceiling; requirements for non-bank financial
institutions to hold debt issued by the government and
state-owned enterprises; and moral suasion to lower bank
lending rates. However, these measures may not prove
effective in achieving sustainably higher growth and
financial deepening. |
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