Real Sector Awaits Decrease of Interest Rate Realization
Friday, 08 December, 2006 | 15:35 WIB

TEMPO Interactive, Jakarta: The Board of Bank Indonesia (BI’s) governors' meeting yesterday (12/7) once again cut the BI Rate by 50 basis points to 9.75 percent against the previous rate of 10.25 percent.

Therefore, a decrease of the benchmark rate in 2006 below one digit has already met the market's hope.

However, senior economist at PT Bank Negara Indonesia , Ryan Kirnanto, said that as long as the real sector is stagnant, decline in the interest rate to one digit will be useless for Indonesia's economy.

The reason is that the business world is still awaiting realization and implementation of the economic policy package of the financial and investment sector as well as legal certainty. “Now, we will see if the banking circle has the commitment to cut the loan interest rate,” Ryan told Tempo.

According to him, there will be no reason for the bank not to cut its interest rate. “The government must also set out real steps to stimulate the economy,” said Ryan.

However, Ryan acknowledged that the banking circle will only decrease the credit interest rate the first quarter of next year because the bank is now prepared for closing the books on 2006.

SURYANI IKA SARI