Bank Indonesia: credit growth predicted to go down in 2009

Jakarta (ANTARA News) - Bank Indonesia deputy governor Hartadi A Sarwono said here on Monday he predicted credit would grow around 22 percent next year or drop from this year which is estimated to reach above 30 percent.

"Credit can still grow 20 percent and this will not affect the economy deeply as it will be balanced by funds from a third party," he said at a meeting with the Regional Representatives Council.

He said next year`s credits would dominate working capitals while investment credits were expected to drop compared to this year.

"Investment seems to go down but working capitals will become significant while consumption should remain to support consumer activities," he said.

He said credit grew very fast this year reaching 36 percent while collection of third party funds grew below 20 percent and therefore liquidity in banks was thin making the cost of funds rise and bank credits also increase.

Because of that banks in the fourth quarter this year would slow down their distribution of credits to increase their liquidity, he said.

Therefore, he said, the growth of credits in 2009 had to be accompanied by growth of funds from a third party to make the country`s economy to sustain.

He said as a monetary authority the central bank would continue to monitor the flow of funds from banks to the real sector to assure that it was not hindered.

"What is important for us is enough liquidity to support economic activities so that they will not stop. What is meant by stoppage is that some people actually still have capability to conduct economic activities but could not do them because they have no funds. Investment funds or working capitals must not stop flowing. Bank Indonesia will monitor the liqudity from day to day," he said.

He said it was expected the 22 percent credit growth would support next year`s economic growth which was expected to reach five percent.