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The Financial Stability System Committee: Financial System Stability in Quarter 2 of 2020 Normal Eventhough Needs Vigilant Measures

Jakarta, 05/08/2020 MoF - The Financial Stability System Committee (KSSK) asessed that the stability of the financial system in the second quarter of 2020, namely the April, May and June periods is normal even though vigilance continues to be increased amid the Covid-19 pandemic. KSSK used all periods in the second quarter to asess all components that affected financial system stability in quarter II - 2020.

This was conveyed by Minister of Finance (Menkeu) Sri Mulyani Indrawati at a virtual press conference with the Governor of Bank Indonesia, the Chairman of the Board of Commissioners of Financial Services Authority (DK OJK), and the Chairman of the Board of Commisioners Indonesia Deposit Insurance Corporation (DK LPS) who are members of the Financial Stability System Committee (KSSK) on Wednesday (05/08) in Jakarta.

"The Covid pandemic has caused economic growth both at the local and national levels to experience contraction and corrections to global and national economic growth have begun to appear, especially in the second quarter. The possibility of a second wave occurring in various countries that have opened their economies and there is no certainty about when vaccines will be found and can be distributed to overcome this pandemic, causing quite high uncertainty for the dynamics of the national and global economy," explained the Minister of Finance.

Minister of Finance added that even various international institutions have made sharp corrections of the global economic projection. The IMF predicts global economic growth will contract at -4.9% and in October. The IMF will issue its latest projections for 2020. The World Bank also corrects global economic growth to -5.2% for 2020. Meanwhile, the OECD provides projections between -7.6% and -6%.

Today, the Statistics Indonesia (BPS) has released for the second quarter that the economy contracted by -5.32% which was much lower than last year where the second quarter was able to record a growth of 5.05%. This was influenced by economic activity which experienced a sharp decline in the April and May periods. However, KSSK saw that in June there had been an improvement or reversal from the trend and it is hoped that this will be maintained in the third quarter.

"The steps taken by the monetary fiscal authority and in this case from the financial sector by the OJK and LPS, regarding these economic dynamics and their potential impact on the stability of our financial system. In addition to seeing and analyzing existing data, KSSK continues to formulate and design policies to minimize the negative impact of the Covid-19 pandemic on economic activity and the financial sector and will formulate policies if changes are needed along with developments in the economy and in the financial sector," concluded the Minister of Finance. (ip/hpy/nr)