Jakarta. The National Economic Council (DEN) on Monday called on the government to safeguard macroeconomic stability through closer fiscal and monetary policy coordination, saying a credible policy response will be key to weathering global uncertainty and maintaining investor confidence as the rupiah weakens.

DEN member Mari Elka Pangestu said policymakers should focus on responding swiftly and consistently to global challenges rather than merely anticipating risks.

"Every country is facing a highly uncertain global environment. What matters is how each country responds to that uncertainty," Mari Elka said after an economic coordination meeting with lawmakers, the government, Bank Indonesia, and the Finance Ministry in Jakarta.

She said DEN had previously presented its latest economic assessment and policy recommendations to President Prabowo Subianto, which were revisited during Monday's coordination meeting.

The former trade minister said maintaining short-term macroeconomic stability requires strong coordination between fiscal and monetary authorities, particularly as geopolitical tensions continue to lift global oil prices, fueling inflation and eroding purchasing power.

"The priority is to maintain macroeconomic stability in the short term. We have already seen the impact of global uncertainty, including rising oil prices and their effect on inflation and people's purchasing power. That is why fiscal and monetary measures, as well as coordination between the two, were central to our discussions," she said.

Her remarks come as Bank Indonesia has tightened monetary policy aggressively this year to stabilize the rupiah and curb capital outflows. The central bank has raised its benchmark interest rate by a cumulative 100 basis points since May, bringing the BI Rate to 5.75% at its June 18 policy meeting.

The rupiah has weakened more than 7% against the US dollar year-to-date, while Indonesia's foreign exchange reserves fell to $144.9 billion in May, highlighting the pressure from persistent global market volatility.

Meanwhile, annual inflation accelerated to 3.08% in May, driven by higher food prices, transportation costs, and increases in non-subsidized fuel prices following the rupiah's depreciation.

Despite those challenges, Mari Elka said Indonesia's economic fundamentals remain sound, although policymakers must remain vigilant in preserving market confidence.

"Indonesia's economic fundamentals remain relatively strong. However, we are facing a weaker rupiah, which means we must pay close attention to maintaining confidence and trust," she said.

Bank Indonesia projects the economy to grow between 4.9% and 5.7% in 2026, while both the World Bank and the International Monetary Fund forecast growth of around 5%. The World Bank, however, warned that external headwinds and rising energy subsidy costs could weigh on economic activity.

Mari Elka said consistent policymaking and close coordination between the House of Representatives, the government, Bank Indonesia, and the Finance Ministry will remain essential to maintaining stability and strengthening investor confidence.

"Coordination forums like this should continue so that all institutions can align their views and formulate strategic policy responses to evolving global economic challenges," she said.

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