The M2 growth in June 2022 was mainly influenced by the acceleration of credit disbursement and developments in government finances.

Jakarta (Indonesia Window) – Bank Indonesia (BI) has noted that the economic liquidity or the money supply in a broad sense (M2) in June 2022 continued to grow positively by 10.6 percent compared to the same period in the previous year (year-on-year/yoy) to 7,888.6 trillion rupiahs (some 525.2 billion U.S. dollars), or remains strong compared to the growth in May 2022 which was recorded at 12.1 percent (yoy).

This development was driven by the growth in the money supply in the narrow sense (M1) of 16.6 percent (yoy) and quasi-money of 3.3 percent (yoy), BI’s Head of the Communications Department Erwin Haryono said in an official statement here on Friday.

According to him, the M2 growth in June 2022 is mainly influenced by the acceleration of credit distribution and developments in government finances.

The credit distribution in June 2022 grew 10.3 percent (yoy), or higher than the previous month's growth of 8.7 percent (yoy), which was in line with the strengthening of the credit distribution, both in terms of productive and consumptive loans.

The credit disbursement was driven by lower lending rates compared to the previous month. In June 2022, the weighted average loan interest rate was recorded at 8.94 percent, down five basis points compared to the previous month, which was 8.99 percent.

BI also noted that in June 2022, the M1 grew 16.6 percent (yoy), lower than the previous month's 18.4 percent (yoy), especially rupiah demand deposits and rupiah savings that can be withdrawn at any time.

The rupiah demand deposits grew by 29.6 percent (yoy), lower than the growth in the previous month of 32.6 percent (yoy).

Electronic money float funds in June 2022 were recorded at 9.5 trillion rupiahs (some 632.5 million U.S. dollars) with a share of 0.2 percent against the M1, or grew 17.4 percent (yoy), lower than the previous month's 18.5 percent (yoy).

The rupiah savings that can be withdrawn at any time with a share of 48.1 percent against the M1 were recorded at 2,167.4 trillion rupiahs (about 144.3 billion dollars) in the report position, or grew 11.2 percent (yoy), lower than May 2022's 13.2 percent (yoy).

The currency circulation in June 2022 amounted to 815.4 trillion rupiahs (about 54.2 billion dollars), or grew steadily by 10.3 percent (yoy).

Meanwhile, net bills to the central government contracted by 14 percent (yoy), or reversed from the positive growth in May 2022 of 3.9 percent (yoy), Erwin said.

The contraction was caused by an increase in the monetary system's obligations to the central government by 24.4 percent (yoy), mainly in the form of central government deposits.

On the other hand, net foreign assets contracted 1.7 percent (yoy), or improved compared to the 2.9 percent (yoy) contraction in the previous month.

Reporting by Indonesia Window