World Bank issues $300m loan to boost Indonesian financial sector
The World Bank has approved a $300 million loan to support the development of financial technology and inclusion in Indonesia.
According to the World Bank about half of the adult Indonesian population do not have access to bank accounts.
It adds that the limited availability of financial services and lack of incentives for long-term savings “creates further risks for individuals and restricts investment opportunities in critical sectors, such as infrastructure.”
The development policy loan will provide budget support for Indonesia’s reform agenda in three key policy areas.
The first of these is increasing the size of the country’s financial sector by expanding the products and services it can offer people.
The second area focuses on improving the efficiency of the financial sector by improving regulatory controls and making practices “more reliable and technology-orientated.”
Finally, the reforms aim to improve Indonesia’s ability to withstand financial shocks by strengthening its resolution frameworks.
Satu Kahkonen, the World Bank country director for Indonesia, says that with the pace of poverty reduction slowing, “it is essential to protect those who are still struggling to achieve the financial security of the middle class.”
She adds: “A sound and well-functioning financial sector is critical to sustain Indonesia’s growth and to achieve the government’s economic growth and poverty reduction goals, particularly amidst the continued challenging global conditions.”