Bank Indonesia says new bank loans increasing

The Jakarta Post, Jakarta

Bank Indonesia reported on Thursday that the intermediary role of the country's banking sector was steadily improving, with Rp 3.3 trillion (about US$365 million)-worth of new loans distributed during October.

The October volume brought the total loan exposure from local banks during the January to October period to Rp 63.6 trillion, or some 40 percent higher than for the same period last year, the report said.

Of the new loans, some Rp 2.3 trillion has been distributed to businesses categorized as small and medium enterprises (SMEs).

The report cited falling central bank interest rates, a stable rupiah and relatively manageable inflation as the reasons behind the rise in new bank lending.

Consequently, in November, Bank Indonesia concluded that the overall economic and monetary condition in the country was heading for improvement.

In fact, the rupiah, feared to be the hardest hit by the recent Bali attack, strengthened in November by 2.6 percent to Rp 8,978 per U.S. dollar, compared with October.

November's on-year inflation, stated to be 1.85 percent, brought the total figure in the first eleven months of the year to 8.72 percent.

The central bank hoped that the currently improving monetary situation would continue next year, a prerequisite if the country was to continue its economic recovery.

BI predicted next year the economy to grow within the range 3.5 percent to 4.0 percent.