Executive Director of the Center of Reform on Economic (CoRE) Indonesia Mohammad Faisal stated that the government as the fiscal authority must issue policies that support the easing of monetary policy carried out by Bank Indonesia. This is intended so that the economy can move optimally.
“It is clear that there must be a mix of monetary and fiscal policies. So when the monetary policy is easing, then the fiscal policy should also be easing. Don’t make it contradictory, monetary easing, fiscal tightening,” he said when contacted, Friday (20/9).
Faisal said that BI’s monetary policy easing must be accompanied by fiscal policy easing so that there is an increase in public demand. The easing is needed, especially to boost the consumption enthusiasm of the lower middle class.
The fiscal policies that can be given, said Faisal, include strengthening inflation control, job creation, incentives to increase production, and boosting the income of the lower middle class. “Because the biggest homework is there,” he explained.
Also read: Government Ensures Readiness of State Budget to Respond to BI Rate Increase
Faisal added that the easing of the BI Rate policy was supposed to encourage a decrease in banking interest rates. Low credit interest rates are also said to be able to increase public consumption enthusiasm.
“With lower interest rates, it is hoped that middle-class people who have savings can make better use of them or be more interested in spending, but this will not be effective without fiscal encouragement as well,” he said.
“Because when income is limited, they automatically have to be careful in spending, they actually have already eaten up their savings because of necessity, so if they later want to spend more widely, it must be driven by income and that is the role of fiscal support,” Faisal concluded. (Mir/M-4)
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