Stifling interest rates<\/p>\n
Bank Indonesia has increased its interest rate for Bank
\nIndonesia promissory notes (SBI) to 45 percent a month. One
\nconsequence is an increase of commercial banks' interest rates to
\n47.5 percent for one-month time deposits and 19 percent for one
\nyear. The central bank's purpose for increasing its SBI interest
\nrate is to attract the people to deposit their money in banks,
\nwith the expectation that the rupiah exchange rate will be
\nstrengthened. This objective has not been attained because the
\nexchange rate remains relatively high, that is Rp 8,500 for one
\nU.S. dollar.<\/p>\n
Apparently, the bad effect on domestic businesspeople was
\nhardly taken into account. They have borrowed money from banks
\nfor their operations and now, the interest rate on loans has been
\nraised to about 60 percent per annum. This is a heavy burden for
\nthem.<\/p>\n
They are experiencing major difficulties because of the
\nmonetary crisis. Imported raw material and spare parts have
\nincreased by 200 percent to 400 percent. If this condition
\ncontinues for a long time, it will result in bankruptcy for many
\nbusinesses. There will be huge lay offs. The economy will
\nstagnate or go into recess. It will worsen the economic crisis,
\nwhich will bring destruction to the country.<\/p>\n
If the association of banks has fixed the time-deposit
\ninterest rate at a maximum of 47.5 percent for one-month deposits
\nand 19 percent for one-year deposits, businesspeople also want to
\nsee a reasonable level of interest for their loans. In my
\nopinion, that level would be a maximum of 30 percent.<\/p>\n
It is hoped that Bank Indonesia will lower its SBI interest
\nrate to a reasonable level.<\/p>\n
SUHARSONO HADIKUSUMO<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/stifling-interest-rates-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }