Jakarta. Finance Minister Purbaya Yudhi Sadewa said Friday that his decision to backtrack the Rp 75 trillion ($4.5 billion) injection to state lenders would not disrupt the economy.

Purbaya had previously injected a total of Rp 276 trillion ($16.5 billion) into state-owned banks to jumpstart lending. The money was once parked at the central bank. At the end of December, the government pulled Rp 75 trillion out of the banking system and transferred it to ministries.

“We use the [withdrawn] money for the regular spending at the ministries and government agencies. So I withdrew it from the system so the government can immediately spend that cash. This way, the funds will immediately enter our economic system,” Purbaya told reporters in Jakarta.

“It’s even better this way. We can create a multiplier effect through government spending. I don’t see anything wrong with it because the [remaining] Rp 201 trillion remains in the state banks,” Purbaya said. 

Shortly after joining the cabinet in September, Purbaya unveiled a liquidity injection totaling Rp 200 trillion in state banks. The details of the distribution were as follows: BNI, BRI, Mandiri (Rp 55 trillion each); the mortgage bank BTN (Rp 25 trillion); the sharia bank BSI (Rp 10 trillion). Purbaya later decided to give Rp 1 trillion to the Jakarta government-owned lender Bank DKI while adding Rp 25 trillion for BNI, BRI, and Mandiri, respectively.

However, he admitted that the fund placement only had a small impact on lending. Bank Indonesia reported that loan growth stood at only 7.74% year-on-year in November, lower than the 8-11% target. Purbaya attributed the sluggish growth to “policy misalignment” between the government and the central bank.

“But we have already taken care of it [that misalignment],” Purbaya said, while saying that the central bank has become more supportive over the past two weeks.