Prabowo Orders 4 State Banks to Cut Poor Borrower Rates as Revenue Ratio Stalls Near 11%
Updated
Updated · heygotrade.com · May 20
Prabowo Orders 4 State Banks to Cut Poor Borrower Rates as Revenue Ratio Stalls Near 11%
1 articles · Updated · heygotrade.com · May 20
Indonesia's 2027 budget address paired a directive to BRI, Mandiri, BNI and BTN to lower lending rates for poor borrowers with a warning that state revenue equals only about 11% of GDP.
Prabowo said that ratio is the lowest in the G20 despite more than $65 billion a year in commodity income and roughly 5% annual GDP growth over the past seven years.
He also pointed to worsening social indicators: poverty rose to 49.5 million from 46.1 million since 2017, while the middle class shrank to 17.4 million from 22.1 million.
The order puts pressure on state-bank net interest margins because lenders may have to shift credit toward riskier, lower-income borrowers at cheaper rates.
For investors, the combination of weak fiscal capacity and bank-rate intervention raises concern over higher risk premia and possible pressure on the rupiah ahead of further budget debate.
Can Indonesia's state banks fund a populist agenda without triggering a financial crisis and scaring away foreign investment?
Why did years of economic growth leave millions of Indonesians poorer, and can forced bank lending reverse this trend?
As global tensions drive capital away, is a new US trade deal enough to save Indonesia from its fiscal weaknesses?