Monetary Policy Meets Sustainable Economic Growth: Liquidity Incentives Set to Roll out for Banks Financing Priority Sectors

The enforcement of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“Law 4/2023”) established the authority of Bank Indonesia (“BI”) to manage liquidity in order to support economic growth (“Liquidity Management”), including through monetary controls that are implemented via monetary operations within the money and foreign exchange markets, as well as through the regulation of the minimum statutory reserve (Giro Wajib Minimum – “GWM”) in both the rupiah and foreign currencies.[1] In light of this mandate, BI has now decided to issue Regulation No. 6 of 2025 on Liquidity Management to Support Sustainable Economic Growth (“Regulation 6/2025”), which has been in force since 27 March 2025.[2]