A street in Jakarta, Indonesia (Photo: Xinhua/VNA)Jakarta (VNA) – The World Bank’s Board ofExecutive Directors has approved a loan of 400 million USD to support reformsthat will help the Government of Indonesia increase the depth, improve theefficiency, and strengthen the resilience of the financial sector.
The bank said the COVID-19 pandemic has causedrecession in Indonesia, with potentially long-lasting financial, fiscal, andsocial implications. While the banking system is well-capitalised andprofitability is high, the lack of depth in the Indonesian financial marketsincreases the country’s vulnerability to external shocks.
The new financing is designed to help the countryaddress financial sector vulnerabilities heightened by the pandemic. It does sothrough support to measures such as extending financial services to previouslyunderserved groups, reducing the costs of such services for individuals andbusinesses alike, and strengthening the capacity of the financial sector towithstand financial and non-financial shocks.
The Government of Indonesia is committed tostrengthening the financial sector given its critical role in sustainingIndonesia’s growth and in reducing poverty, especially during the COVID-19recovery phase, said Minister of Finance Sri Mulyani Indrawati.
This financing complements the government’s efforts tocushion the financial sector and the overall economy from the impacts of theCOVID-19 crisis, said Satu Kahkonen, World Bank Country Director for Indonesiaand Timor-Leste.
The bank’s support to financial sector reforms inIndonesia is an important component of the World Bank Group’s CountryPartnership Framework for Indonesia, whose engagement area on strengtheningeconomic resilience and competitiveness contains a specific objective focusedon increasing the depth, improving the efficiency and strengthening theresilience of the financial sector.
The new financing is also based on theWorld Bank Group’s GRID (green, resilient, inclusive development) principles./.
VNA
