Thomas Djiwandono, Indonesia’s newly selected Deputy Governor of Bank Indonesia (BI), replacing Juda Agung, called for a deeper and more modern form of fiscal–monetary synergy to support sustainable economic growth, moving beyond the extraordinary “burden sharing” measures used during the COVID-19 pandemic.
Speaking after his fit and proper test before the House of Representatives’ Commission XI in Jakarta, Thomas emphasized that Indonesia’s current economic ambitions require a different policy approach. With the government targeting higher long-term growth, coordination between fiscal authorities and the central bank must focus more closely on liquidity management and interest rate effectiveness.
“What I want to initiate is fiscal–monetary synergy, especially at the level of liquidity and interest rates. This is fundamentally different from what was done during the pandemic,” Thomas said, as quoted by Antara.
Thomas referred to Law No. 4 of 2023 on Financial Sector Development and Strengthening (P2SK), which expands the central bank’s mandate beyond price stability to include supporting economic growth. While BI has pursued accommodative monetary policy in recent years, he acknowledged that policy transmission remains slow.
Indonesia’s benchmark BI-Rate has been cut sharply from 6.25% in 2024 to 4.75% today. However, Thomas noted that a 1% reduction in the policy rate translates into only a 0.27% decline in working capital loan interest rates within six months, and at most 0.59% over three years. This lag, he said, limits the real-sector impact of monetary easing.
“The transmission of policy impact takes a long time and is not fully passed through. That’s why I feel policy synergy with fiscal authorities and financial regulators is necessary,” he added.
According to Thomas, coordination between fiscal and monetary institutions has already improved, particularly through the Financial System Stability Committee (KSSK), which brings together BI, the Ministry of Finance, the Financial Services Authority (OJK), and the Deposit Insurance Corporation (LPS). However, he believes this cooperation can be further strengthened to better manage risks and support government priority programs.
During the pandemic, fiscal expansion and burden sharing played a critical stabilizing role. Today, Thomas said, cross-institutional coordination should focus on supporting long-term programs such as public housing, food security, and financial inclusion, while maintaining macroeconomic stability.
In his presentation, Thomas introduced a thematic strategy known as “GERAK,” which emphasizes governance, policy effectiveness, financial system resilience, accelerated fiscal-monetary-financial synergy, and sustainable financial transformation. Under this framework, BI could expand macroprudential tools, the government could manage cash placement more productively, OJK could provide banking incentives, and LPS could strengthen depositor confidence.
Drawing on his experience in the private sector and as Deputy Finance Minister, he stressed that market confidence must be earned through concrete results.
Addressing public sentiment surrounding his nomination, Thomas said credibility can only be built through performance. He also confirmed that he stepped down as Treasurer of the Gerindra Party in March 2025 and fully resigned from party membership by the end of 2025, underscoring his commitment to BI’s independence and professional integrity.
Source: Antara, Tempo, CNBC Indonesia
Photo Credit: via brecorder.com
