Government Fund Placement Extended, Cheaper Credit Expected During Ramadan

REPUBLIKA.CO.ID, JAKARTA — The extension of the government’s SAL (Surplus Budget Allocation) fund placement in banks is considered to provide more breathing room for the financial industry, especially ahead of Ramadan and Eid al-Fitr when public cash needs increase. PT Bank Mandiri (Persero) Tbk welcomed the government’s decision to extend the tenor of the fund placement, which was originally scheduled to end on March 13, 2026. Bank Mandiri’s Chief Economist, Andry Asmoro, believes that this move will have a direct impact on banking liquidity conditions.

“I believe that the extension of liquidity from the Minister of Finance yesterday has a positive impact,” said Andry to reporters on Wednesday (February 25, 2026) evening.

He explained that the placement of SAL funds helps increase liquidity, thereby easing competition for funds among banks, especially among large banks. If the funds were withdrawn upon maturity, liquidity pressures would likely increase.

“Because, imagine if, for example, when the maturity date arrived yesterday, and then it was withdrawn, it would certainly be untimely,” he said.

The timing of this extension is considered crucial. During the Ramadan and Eid al-Fitr periods, cash circulation in the community increases sharply. Banks must ensure that funds are available to meet the needs for cash withdrawals, salary payments, and small business transactions.

With more relaxed liquidity, banks have more room to channel credit. Bank Mandiri estimates that the industry’s credit growth this year could reach 9-10 percent annually.

“Can it encourage credit growth? Yes, if we look at it, there is indeed the potential for improvement in credit demand, especially with the presence of SAL funds,” said Andry.

He added that the easing of liquidity tensions is also expected to put downward pressure on lending rates. So far, the transmission of lower benchmark interest rates has not been fully reflected in bank lending rates.

Data from Bank Indonesia shows that throughout 2025, the BI rate has been cut by 125 basis points. However, lending rates have only decreased by 40 basis points, from 9.20 percent at the beginning of 2025 to 8.80 percent in January 2026. Meanwhile, one-month deposit rates fell by 68 basis points, from 4.81 percent to 4.13 percent during the same period.

“The decline in third-party fund rates is also still relatively limited. It has been aggressive, but it is still below the decline in the BI rate itself. This is what should have a positive impact,” he said.