MONETARY POLICY REPORT

Quarter I 2021

Foreword

The Board of Governors

PERRY WARJIYO Guvernor

DESTRY DAMAYANTI Senior Deputy Governor

SUGENG Deputy Governor

ROSMAYA HADI Deputy Governor

DODY BUDI WALUYO Deputy Governor

DONI PRIMANTO JOEWONO Deputy Governor

i Quarter I 2021

Table of Content

Foreword i Executive Summary 1

The Board of Governors i 1. Global and Domestic Economic 2 Developments

Table of Content ii 2. Bank Indonesia Policy Response 5

Quarter I 2021 ii

Executive Summary

The global economy is expected to surpass previous although further opportunities to stimulate the bank growth forecasts despite the ongoing multispeed intermediation function remain. Cash and non-cash recovery. At home, domestic economic gains are payment system transactions are increasing in line with persisting on the back of stronger export performance rapid economic and financial digitalization. and fiscal spending. Indonesia's Balance of Payments The BI Board of Governors Meeting agreed on 19th and (BOP) remains solid, thereby reinforcing external sector 20th April 2021 to hold the BI 7-Day Reverse Repo Rate at resilience. In line with Bank Indonesia stabilization 3.50%, while also maintaining the Deposit Facility (DF) measures, rupiah exchange rates remain relatively stable, rates at 2.75% and Lending Facility (LF) rates at 4.25%. despite persistently elevated global financial market The decision is consistent with the need to maintain uncertainty. Inflation remains low in line with weak rupiah exchange rate stability amidst persistently demand and adequate supply. In line with Bank elevated global financial market uncertainty despite Indonesia's accommodative monetary policy stance and projected low inflation. Supporting the national economic synergy with fiscal policy to stimulate economic recovery, recovery effort, Bank Indonesia has optimized its loose liquidity conditions persist in the banking industry accommodative monetary and macroprudential policy and financial markets. Interest rates are coming down in mix and accelerated payment system digitalization. response to a lower policy rate and loose liquidity conditions. Financial system resilience is still solid,

1 Quarter I 2021

CHAPTER I Global and Domestic Economic Developments

The global economy is expected to surpass previous economies, including Indonesia. Meanwhile, elevated growth forecasts despite the ongoing multispeed financial market uncertainty and UST yield volatility recovery. Such developments stem primarily from persist in line with faster economic recovery momentum economic gains posted in the United States and China as in the US and market perception of the Federal Reserve's the main drivers of the global recovery. The US economic policy direction. Such developments have eroded capital recovery is gaining momentum in line with the orderly inflows and intensified currency pressures in most vaccination rollout and additional large-scale fiscal developing economies, including Indonesia. stimuli. In China, stronger economic growth is supported At home, domestic economic gains are persisting on the by growing domestic and global demand. Therefore, Bank back of stronger export performance and fiscal spending. Indonesia has revised its global economic growth Exports are expected to continue improving beyond early projection for 2021 upwards to 5.7% from 5.1% projections at the beginning of the year on growing previously. Stronger global economic recovery demand from Indonesia's main trading partners, China in momentum was also confirmed by several early indicators particular, driven by crude palm oil (CPO), metal ore, pulp in March 2021, including upward trends recorded in and wastepaper, motor vehicles as well as iron and steel. terms of the Purchasing Managers Index (PMI), consumer Spatially, export performance is improving in the Java confidence and retail sales in several countries. In region along with Sulawesi-Maluku-Papua (Sulampua). response to global economic gains, world trade volume Fiscal stimuli in the form of social aid program (bansos) and international commodity prices are also increasing, disbursements, procurement and capital spending have thus boosting export performance in developing also increased beyond previous forecasts. Meanwhile,

Quarter I 2021 2

consumer expectations and retail sales in March 2021 investment to domestic financial markets. As of 19th April point to subdued private consumption gains in line with 2021, therefore, the rupiah recorded 3.42% (ytd) public mobility restrictions amidst government efforts to depreciation against the yearend level in 2020, which is accelerate the national vaccination program. Therefore, comparatively lower than several other emerging Bank Indonesia projects national economic growth for markets, however, such as Brazil, Turkey and Thailand. 2021 in the 4.1-5.1% range. Moving forward, domestic Bank Indonesia continues to strengthen exchange rate economic recovery momentum is expected to build in stabilization policy in line with the rupiah's fundamental response to stronger exports, ongoing fiscal stimuli and value and market mechanisms through effective increasing investment, as signalled by the upward monetary operations and adequate market liquidity. manufacturing PMI trend. Orderly implementation of the Inflation remains low in line with weak demand and vaccination program, coupled with the disciplined adequate supply. In March 2021, the Consumer Price application of Covid-19 protocols, remain a prerequisite Index (CPI), as a measure of headline inflation, stood at for a faster domestic demand recovery. 0.08% (mtm) or 1.37% (yoy). Core inflation is also low in Indonesia's Balance of Payments (BOP) remains solid, line with compressed domestic demand, maintained thereby reinforcing external sector resilience. A narrow exchange rate stability and consistent Bank Indonesia current account deficit is expected in the first quarter of policy to anchor inflation expectations to the target 2021, supported by a maintained trade surplus of corridor. Inclement weather has edged up volatile food USD5.52 billion after posting an USD8.27 billion surplus in inflation yet remains under control. Inflationary pressures the previous period. The trade surplus was primarily on administered prices are also mild in response to underpinned by demand in China, US and Japan, together unchanged toll road charges and airfares. Therefore, with higher international commodity prices. Several inflation in 2021 is projected to remain under control primary commodities recorded increases in terms of within the 3.0%±1% target range. Bank Indonesia is still export value, such as CPO and metal ore, as well as firmly committed to maintaining price stability and manufacturing commodities, including iron and steel, strengthening policy coordination with the Government organic chemicals and motor vehicles. Meanwhile, the through national and regional inflation control teams (TPI capital account is expected to maintain a surplus in and TPID) to control headline inflation within the response to capital inflows in the form of foreign direct predetermined target range. Such coordination with the investment (FDI) and portfolio investment. Portfolio Government is currently focused on controlling investment recorded a net inflow totalling USD5.43 billion inflationary pressures during the holy fasting month of in the first quarter of 2021. The position of reserve assets Ramadan and Eid-ul-Fitr festive period 1442 H. at the end of March 2021 stood at USD137.1 billion, In line with Bank Indonesia's accommodative monetary equivalent to 10.1 months of imports or 9.7 months of policy stance and synergy with fiscal policy to stimulate imports and servicing government external debt, which is economic recovery, loose liquidity conditions persist in well above the three-month international adequacy the banking industry and financial markets. Beginning in standard. Moving forward, Bank Indonesia projects a low 2020, Bank Indonesia has injected liquidity through current account deficit in the 1.0-2.0% of GDP range in quantitative easing to the banking industry totalling 2021, thus supporting external sector resilience in Rp798.85 trillion (5.18% of GDP), consisting of Rp726.57 Indonesia. In addition, various measures to reinforce trillion in 2020 and Rp72.27 trillion in 2021 (as of 16th external resilience are being taken through April 2021). Synergy between monetary expansion and implementation of the Job Creation Act to attract foreign fiscal stimuli has been strengthened through SBN capital inflows in the form of FDI and portfolio purchases by Bank Indonesia in the primary market. After investment, while maintaining the attractiveness of making purchases in the primary market totalling domestic financial assets for investment. Rp473.42 trillion to fund the 2020 State Budget, Bank In line with Bank Indonesia stabilization measures, Indonesia is continuing to purchase SBN in the primary rupiah exchange rates remain relatively stable, despite market in 2021 to help fund the 2021 State Budget persistently elevated global financial market through mechanisms pursuant to the Joint Decree issued uncertainty. As of 19th April 2021, the rupiah depreciated by the Minister of Finance and Governor of Bank 1.16% on average, or by 0.15% (ptp) on the March 2021 Indonesia on 16th April 2020, which was subsequently level. Rupiah depreciation is consistent with persistently extended on 11th December 2020 until 31st December high global financial market uncertainty that has 2021. As of 16th April 2021, Bank Indonesia has purchased restrained foreign capital inflows in the form of portfolio SBN worth Rp101.91 trillion in 2021 in the primary

3 Quarter I 2021 market, including Rp28.33 trillion through primary auction Indonesia has maintained an accommodative and Rp73.58 trillion through greenshoe options (GSO). macroprudential policy stance by holding the CCyB at 0%, Loose liquidity conditions in March 2021 have increased the Macroprudential Liquidity Buffer (MPLB) at 6% with the ratio of liquid assets to deposits to 33.58%, repo flexibility at 6%, as well as the Sharia accompanied by solid 9.20% (yoy) deposit growth. In Macroprudential Liquidity Buffer at 4.5% with repo terms of monetary aggregates, M1 and M2 growth flexibility also at 4.5%. In addition, Bank Indonesia has remained high in March 2021 at 10.8% (yoy) and 6.9% also strengthened prime lending rate transparency in the (yoy) respectively. banking industry and maintained coordination with the Government and other relevant authorities to accelerate Interest rates are coming down in response to a lower monetary policy transmission to bank lending rates and policy rate and loose liquidity conditions. In the money catalyse lending/financing to the business community. market, loose liquidity and BI7DRR reductions totalling 150 basis points since 2020 have contributed to a low Cash and non-cash payment system transactions are overnight interbank rate, averaging 2.79% in March 2021. increasing in line with rapid economic and financial The banking industry responded to interest rate digitalization. In March 2021, currency in circulation grew transparency policy by reducing the prime lending rate 7.61% (yoy) to reach Rp782.7 trillion. Transaction value 171bps in February 2021, led by state-owned banks that using ATM cards, debit cards and credit cards stood at implemented a 266bps (yoy) reduction to 8.70%. The Rp668.7 trillion, expanding 9.58% (yoy) in March 2021 banking industry has lowered prime lending rates across due to increasing economic activity. On the other hand, all loan types, dominated by microloans at 346bps (yoy) digital economy and finance transactions maintained solid which nevertheless recorded the highest prime lending growth in line with greater public acceptance and growing rate at 12.72%. Meanwhile, lending rates on housing public preference towards online shopping, a surge of consumer loans, non-housing consumer loans, corporate digital payments and acceleration of digital banking. loans and retail loans have been reduced by 194bps, Therefore, the value of electronic money transactions 193bps, 139bps and 136bps (yoy) respectively to 8.19%, stood at Rp21.4 trillion in March 2021, expanding 42.46% 9.25%, 8.26% and 8.84%. Industrywide, prime lending (yoy). Similarly, in terms of digital banking, transaction rates have been reduced across all components, namely volume and value growth remained robust at 42.47% the cost of loanable funds by 120bps (yoy), followed by (yoy) and 26.44% (yoy) to reach 553.6 million transactions the overhead cost (OHC) by 31bps (yoy) and profit margin and Rp3,025.6 trillion respectively. Considering greater by 21bps (yoy). State-owned banks and foreign bank public acceptance, increasing public preference and the branches reduced their profit margins by 88bps (yoy) and faster digitalization trend, technological development, 34bps (yoy) respectively, contrasting national private innovation and expansion of the digital ecosystem, Bank commercial banks and regional government banks, where Indonesia continues to accelerate digitalization of an profit margins increased by 48bps (yoy) and 2bps (yoy) inclusive and efficient digital economy and finance respectively in February 2021. through payment system policy by expanding QRIS features, amongst others. Bank Indonesia is also Financial system resilience is still solid, although further strengthening QRIS socialization and education activities opportunities to stimulate the bank intermediation on the supply and demand sides. In preparation for Eid-ul- function remain. The Capital Adequacy Ratio (CAR) in the Fitr, Bank Indonesia is safeguarding the operational banking industry was high in February 2021 at 24.52%, preparedness, availability, security and reliability of the accompanied by persistently low NPL ratios of 3.21% payment systems operated by Bank Indonesia and (gross) and 1.04% (nett). Despite loose liquidity payment system service providers, while encouraging use conditions, the intermediation function of the financial of fast, affordable, secure and reliable cashless sector remains weak, as reflected by a 4.13% (yoy) credit transactions. In addition, Bank Indonesia is also expanding contraction recorded in March 2021. In response, several cash services, particularly currency exchange services in measures are rigorously strengthened through policy the banking industry, and providing public education synergy between the authorities, banking industry and services concerning the rupiah, specifically during the holy business community to maintain optimism and overcome fasting month, to accelerate the Cinta, Bangga and the supply and demand-side constraints impeding bank Paham Rupiah programs, meaning to love the rupiah, be lending to the business community. To that end, Bank proud of the rupiah and understand the rupiah.

Quarter I 2021 4

CHAPTER II Bank Indonesia Policy Response

The BI Board of Governors Meeting agreed on 19th and 2. Strengthening the monetary operations strategy to 20th April 2021 to hold the BI 7-Day Reverse Repo Rate at bolster the accommodative monetary policy stance. 3.50%, while also maintaining the Deposit Facility (DF) 3. Expanding the use of Bank Indonesia Sukuk (SukBI) rates at 2.75% and Lending Facility (LF) rates at 4.25%. for tenors of 1 week to 12 months to strengthen The decision is consistent with the need to maintain sharia monetary operations, effective from 16th April rupiah exchange rate stability amidst persistently 2021. elevated global financial market uncertainty despite projected low inflation. Supporting the national economic 4. Maintaining accommodative macroprudential policy recovery effort, Bank Indonesia has optimised its by holding the countercyclical capital buffer (CCyB) at accommodative monetary and macroprudential policy 0%, the Macroprudential Liquidity Buffer (MPLB) at mix and accelerated payment system digitalization as 6% with repo flexibility at 6%, as well as the Sharia follows: Macroprudential Liquidity Buffer at 4.5% with repo flexibility also at 4.5%. 1. Strengthening rupiah exchange rate policy by maintaining market presence through triple 5. Strengthening Prime Lending Rate (SBDK) intervention policy to preserve exchange rate transparency in the banking industry, while stability in line with the currency's fundamental value coordinating with the Government and other and market mechanisms. relevant authorities to: (i) accelerate monetary policy transmission to lending rates in the banking industry;

5 Quarter I 2021

and (ii) stimulate lending/financing to the corporate 8. Safeguarding the security, reliability and sector. uninterrupted availability of payment system and rupiah currency management services during the 6. Extending the National Clearing System (SKNBI) Ramadan and Eid-ul-Fitr 1442 H festive period. pricing policy of Rp1 from Bank Indonesia to banks and a maximum of Rp2,900 from banks to customers 9. Facilitating trade and investment promotion as well from 30th June 2021 previously until 31st December as socializing the use of Local Currency Settlement 2021 to accelerate national economic recovery (LCS) in conjunction with relevant institutions. In April momentum. and May 2021, promotional activities will be organized in Japan, Singapore, US, China, France and 7. Strengthening QRIS policy to accelerate inclusive and UK. efficient economic and financial digitalization by: The measures outlined above, particularly points 4, 5, 7 a. Raising the QRIS transaction limit from Rp2 and 9, are part of Bank Indonesia's ongoing commitment million to Rp5 million, effective from 1st May to policy synergy with the Financial System Stability 2021; and Committee (KSSK). Bank Indonesia will also continue to b. Lowering the Merchant Discount Rate (MDR) for strengthen policy coordination with the Government and Public Services Agencies (BLU) and Public Service KSSK, including implementation of the Integrated Policy Obligations (PSO) from 0.7% to 0.4%, effective Package, to stimulate bank lending to the corporate and from 1st June 2021. priority sectors, which will help catalyse economic growth and national economic recovery.

Quarter I 2021 6

The global economy is expected to surpass previous growth forecasts despite the ongoing multispeed recovery

Global GDP Growth Global PMI

Country 2018 2019 2020 2021*

World 3,6 2,8 -3,3 5,7 Advanced economies 2,2 1,6 -4,7 5,0 United States 2,9 2,2 -3,5 6,4 Europe 1,9 1,3 -6,6 4,3 Japan 0,3 0,3 -4,8 2,8 Emerging economies 4,5 3,6 -2,2 6,2 China 6,6 5,8 2,3 8,4 India 7,1 4,7 -7,1 11,0 ASEAN-5 5,3 4,8 -3,4 5,1 Latin America 1,1 0,2 -7,0 3,5 Emerging Euro 3,1 2,4 -2,0 3,2 Middle East & Central Asia 1,0 1,4 -2,9 3,7

Consumer Confidence Index Retail Sales

World Trade Volume and Global GDP Commodity Prices

2020 2021 Commodity 2018 2019 Q1 Q2 Q3 Q4 2020 Q1 YTD* Copper 6,7 -7,8 -7,8 -12,3 11,8 21,6 3,3 50,3 38,4 Coal 2,5 -8,6 -8,0 -28,2 -27,9 -9,8 -18,5 19,5 44,8 CPO -19,2 -2,3 33,3 14,0 35,5 34,9 29,4 47,1 42,8 Rubber -16,8 12,4 -18,6 -22,7 3,8 36,4 -0,3 37,7 27,8 Nickel 27,8 7,0 3,8 0,0 -8,1 3,9 -0,1 37,9 25,9 Tin 0,5 -7,5 -17,2 -20,4 3,1 12,6 -5,5 46,1 40,8 Aluminium 7,4 -14,1 -5,8 -15,9 -2,6 9,8 -3,7 22,9 23,2 Coffee -15,4 -11,8 14,8 -2,8 2,9 -3,4 3,0 6,7 13,1 Others 1,2 -0,7 -2,1 -5,6 -4,9 -4,5 -4,3 0,3 3,8 Indonesian Export -2,8 -3,0 1,5 -10,4 -1,7 7,5 -0,8 23,7 29,0 Commodity Prices Oil (Brent)** 71 64 51 31 43 45 42 61 61

7 Quarter I 2021

10 Yr UST & JGB Yield and DJIA Index Risk Perception on EM and Indonesia

EM Capital Flows

Domestic economic gains are persisting on the back of stronger export performance and fiscal spending

Non-oil and Gas Exports Non-Oil and Gas Exports to Main Destination Countries

Quarter I 2021 8

Spatial Non-oil and Gas Exports Non-oil and Gas Imports

Realization of State Budget (APBN) Income Expectations 2020 2021

Realization ITEMS Realization % Realization Budget as of Feb 2021 (IDR Trillion) PERPRES 72 (IDR Trillion) (IDR Trillion) A. State Income and Grants 1,633.6 96.1% 1743.6 219.2 I. Domestic Income 1,621.3 95.4% 1742.7 219.1 1. Tax Income 1,282.8 91.3% 1444.5 181.8 2. NonTax Income 338.5 115.1% 298.2 37.3 II. Grant 12.3 946.2% 0.9 0.1 B. State Expenditures 2,589.9 94.6% 2750.0 282.9 I. Central Government Expenditures 1,827.4 92.5% 1954.5 179.7 1. Employee Spending 380.5 94.3% 421.1 58.7 2. Spending for Goods 421.5 154.3% 362.5 18.2 3. Capital Expenditures 187.3 136.3% 246.8 22.8 4. Payment of Debt Obligations 314.1 92.7% 373.3 40.4 5. Subsidies 196.2 102.2% 175.4 12.4 6. Grant Expenditure 6.3 123.7% 6.8 0.0 7. Social Assistance 202.5 116.1% 161.4 26.8 8. Other Expenditures 119.5 26.5% 207.3 0.3 II. Transfer to Regions and Village Funds 762.5 99.8% 795.5 103.2 1. Transfer to Regions 691.4 99.8% 723.5 99.4 2. Village Funds 71.1 99.9% 72.0 3.8 C. Primary Balance (642.2) -633.1 (23.3) D. Budget Surplus/Deficit (956.3) -1006.4 (63.7) Surplus/Deficit (%GDP) (6.2) -5.7 (0.4)

Farmers’ Exchange Rate Job Vacancy Index

9 Quarter I 2021

Retail Sales Online Sales

Economic Growth - Expenditure Side Economic Growth – Economic Sectors Side 2019 2020 2019 2020 Components 2019 Components 2019 2020 I II III IV I II III IV I II III IV I II III IV Agriculture, Forestry, and Fisheries Mining and excavation Household Consumption 5.02 5.18 5.01 4.97 5.04 2.83 -5.51 -4.05 -3.61 -2.63 Manufacture Electricity and Gas Procurement Non-Profit Institution Serving Water Supply 16.96 15.29 7.41 3.53 10.62 -5.09 -7.76 -1.97 -2.14 -4.29 Construction Household (NPISH) Consumption Wholesale Retail, Car and Motorcycle Repairs Transportation and Warehousing Government Consumption 5.22 8.23 0.98 0.48 3.25 3.75 -6.90 9.76 1.76 1.94 Provision of Accomodation, Food and Beverages Information and Communication Investment (GFCF) 5.03 4.55 4.21 4.06 4.45 1.70 -8.61 -6.48 -6.15 -4.95 Financial Services and Insurance Building Investment 5.48 5.46 5.03 5.53 5.37 2.76 -5.26 -5.60 -6.63 -3.78 Real Estate Corporate Services NonBuilding Investment 3.69 1.96 1.95 -0.13 1.80 -1.46 -18.62 -8.99 -4.71 -8.38 Government Administration, Defence and Compulsory Social Security Exports -1.58 -1.73 0.10 -0.39 -0.87 0.23 -11.66 -11.66 -7.21 -7.70 Education Services Imports -7.47 -6.84 -8.30 -8.05 -7.69 -2.19 -16.96 -23.00 -13.52 -14.71 Health Services and Other Social Activities Other Services GDP 5.07 5.05 5.02 4.97 5.02 2.97 -5.32 -3.49 -2.19 -2.07 GDP 5.07 5.05 5.02 4.97 5.02 2.97 -5.32 -3.49 -2.19

Regional GDP Manufacturing Purchasing Managers’ Index (PMI)

Quarter I 2021 10

Import of Construction Goods

External sector remains resilient

Indonesia’s Balance of Payments Trade Balance Items (Billion USD) 2019* 2020 I II III IV Total I* II* III** IV** Total** Current Account -6.6 -8.2 -7.5 -8.1 -30.4 -3.7 -2.9 1.0 0.8 -4.7 A. Goods 1.3 0.6 1.4 0.3 3.5 4.4 4.0 9.8 9.8 28.2 - Exports, fob 41.2 40.2 43.7 43.4 168.5 41.7 34.6 40.8 46.2 163.3 - Imports, fob -39.9 -39.6 -42.3 -43.1 -164.9 -37.3 -30.7 -31.0 -36.2 -135.2 a. Non-Oil and Gas 2.9 3.1 2.7 3.2 12.0 5.8 3.3 9.4 11.3 29.9 b. Oil and Gas -2.1 -2.9 -2.1 -3.2 -10.3 -2.7 -0.8 -0.7 -1.2 -5.4 B. Services, Primary Income, Secondary Income -7.8 -8.8 -8.8 -8.4 -33.8 -8.1 -6.9 -8.8 -9.2 -32.9 Capital and Financial Account 9.9 6.8 7.4 12.5 36.6 -3.1 10.6 1.0 -0.9 7.7 1. Direct Investment 5.9 5.8 5.2 3.1 20.1 4.0 3.9 1.1 4.2 13.2 2. Portfolio Investment 5.5 4.6 4.6 7.3 22.0 -6.1 9.8 -1.9 2.2 3.9 3. Other Investment -1.6 -3.6 -2.5 2.1 -5.6 -0.7 -3.1 1.8 -7.5 -9.5 Overall Balance 2.4 -2.0 0.0 4.3 4.7 -8.5 9.2 2.1 -0.2 2.6 Memorandum : 0.0 - Reserve Assets Position 124.5 123.8 124.3 129.2 129.2 121.0 131.7 135.2 135.9 135.9 In Months of Imports & Official Debt Repayment 6.7 6.8 6.9 7.3 7.3 7.0 8.1 9.1 9.8 9.8 - Current Account (% GDP) -2.5 -3.0 -2.6 -2.8 -2.7 -1.4 -1.2 0.4 0.3 -0.5

Capital Flow Official Reserve Asset

11 Quarter I 2021

Rupiah vs Peer Countries Peers Country Interest Rate Policies

Rupiah 2021 vs 2020 20 BRL -7.09 -6.98 18 -8.42 TRY -6.99 -4.51 16 JPY 0.21 -4.09 THB 2.66 14 IDR -3.42 2.13 12 -2.77 KRW 5.75 -2.24 10 EUR 5.10 -2.12 MYR 2.96 8 -2.06 INR 1.20 6 SGD -0.57 3.41 4 -0.74 PHP 2.67 point-to-point 0.22 2 CNY 6.27 average 2.74 ZAR 10.35 0 -10.0 -5.0 0.0 5.0 10.0 15.0

Inflation remains low in line with weak demand and adequate supply

CPI Inflation Inflation Expectations , Expected Inflation 2020 Expected Inflation 2021 4.5

4.0

3.4 3.3 3.4 3.5 3.2 3.2 3.2 3.2 3.0 3.0 2.8 2.9 2.8 3.0 2.6 2.6 2.5 2.4 2.4 2.3 2.3 2.3 2.3 2.5 2.2 2.2 2.2 2.0 2.0 2.0 2.0

1.5 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 2020 2021

Regional Inflation

Quarter I 2021 12

Loose liquidity conditions persist and financial system resilience is still solid

Quantitative Easing (QE) and SBN Purchases by Bank Broad Money and Ratio of Liquid Assets to Deposits Indonesia

Policy Rate (BI7DRR) and Overnight Interbank Rate Banking Interest Rates

Policy Rate (BI7DRR) Transmission to Prime Lending Rate Banking Industry’s Capital (PLR)

13 Quarter I 2021

Credit Risk (NPL) Credit and Deposit Developments

Cash and non-cash payment system transactions are increasing, in line with rapid economic and financial digitalization

Currency in Circulation ATM/Debit and Credit Card Transactions

Electronic Money Transactions Digital Banking Transactions Volume

Quarter I 2021 14

Digital Banking Transactions Value QRIS Transactions

Domestic E-commerce Transactions

Domestic economic is expected to improve in 2021

Indonesia GDP Projection Indonesia CPI Inflation Projection

5 4.1 s.d 5.1 3.0

2.72

1.68

-2.07

15 Quarter I 2021

Current Account Deficit Projection Credit and Deposits Projection

11.1

7 - 9 -0.45 5 - 7 6.54 6.08

-1 s.d -2.0

-2.71 -2.41

Electronic Money Transactions Projection Digital Banking Transactions Projection

271 33,331

27,287 27,356 205 21,860

145 17,074

47

12

E-Commerce Transactions Projection

370

266

206

106

Quarter I 2021 16

17 Quarter I 2021