Jakarta. Indonesian policymakers pledged closer coordination between fiscal and monetary authorities to shield the economy against rising global uncertainty, with the central bank focusing on stabilizing the rupiah and maintaining ample liquidity in the financial system.

The commitment emerged from a coordination meeting on Monday involving parliament, the government, Bank Indonesia, and other economic institutions as policymakers seek to protect Southeast Asia's largest economy from external shocks, including volatile financial markets and a weakening rupiah.

The rupiah has fallen about 7% against the US dollar this year, trading at around Rp17,843 per dollar after briefly touching the psychologically important Rp 18,000 level earlier this month, its weakest level on record.

Deputy Governor Destry Damayanti said Bank Indonesia would continue implementing short-term measures aimed at preserving macroeconomic stability.

"In a period of very high global uncertainty, Bank Indonesia needs to adopt short-term policies to achieve stability," Destry told reporters after the meeting at the parliament complex in Jakarta.

The central bank has responded aggressively to currency pressures, raising its benchmark interest rate by a cumulative 100 basis points over the past two months. The BI Rate currently stands at 5.75%.

Destry said adjustments to yields on government bonds and Bank Indonesia's rupiah securities, known as SRBI, had helped attract foreign capital inflows totaling about $9 billion.

"Bank Indonesia will continue to maintain liquidity in the market through the various instruments that we have," she said.

The central bank has also significantly expanded liquidity operations. Destry said monetary operations injected approximately Rp600 trillion ($33.6 billion) into the financial system at the end of May, rising to Rp1,000 trillion by the end of June.

Indonesia's foreign exchange reserves stood at $144.9 billion at the end of May, enough to cover 5.6 months of imports, although reserves have declined for five consecutive months amid global market pressures.

Despite external headwinds, several economic indicators remain resilient. Indonesia's economy grew 5.61% in the first quarter, its strongest first-quarter expansion since 2014, supported by robust household spending during religious holidays and increased government expenditure.

Annual inflation stood at 3.08% in May, remaining within Bank Indonesia's target range of 1.5% to 3.5%, while bank lending growth accelerated to 11.51% year-on-year from 9.98% in the previous month.

Meanwhile, Deputy Finance Minister Juda Agung said Indonesia's fiscal position remained stable, with the state budget deficit expected to remain below the legal ceiling of 3% of gross domestic product through the end of 2026.

The fiscal deficit stood at Rp180.4 trillion, or 0.7% of GDP, at the end of May, while the government projects a full-year deficit of 2.68% of GDP.

Indonesia's government debt ratio remains relatively low at around 40% of GDP, well below the statutory ceiling of 60%.

Juda also projected tax revenues to rise by 19.1% this year, helping support government finances despite external pressures.

"We expect credit growth to remain in double digits in the coming months. Therefore, liquidity in the banking system must continue to be maintained," Juda said.

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