Jakarta. The government has injected an additional Rp 100 trillion ($6 billion) into the banking system, raising fresh questions over whether the move is propping up financial markets more than the real economy.

The latest placement brings total government funds parked in banks to Rp 300 trillion, as authorities step up efforts to maintain liquidity and contain rising bond yields ahead of the Eid holiday period.

Finance Minister Purbaya Yudhi Sadewa said the additional funds were deployed about a week before Eid to ensure sufficient liquidity in the financial system.

“We are seriously maintaining liquidity in the financial system,” Purbaya said at the Finance Ministry on Wednesday.

The funds, originally held at Bank Indonesia, are being redirected into state-owned and regional banks with the expectation that lenders will channel them into credit for the real sector. The placement is flexible and can be withdrawn at any time, giving the government room to adjust based on fiscal needs.

The policy also aims to ease pressure on government bond yields, which have risen between 0.1% and 0.4% amid tightening liquidity. By boosting bank liquidity, authorities expect lenders to increase their purchases of government securities, thereby pushing yields lower and reducing borrowing costs.

However, economists warn the impact may be skewed toward financial markets rather than broader economic activity.

Syafruddin Karimi of Andalas University said the policy could help stabilize yields in the short term, but stressed that bond market performance ultimately depends on macro fundamentals such as inflation, exchange rates, fiscal outlook, and global sentiment.

“Additional liquidity allows banks to absorb more government bonds, which can temporarily ease yield pressures, but it does not guarantee a sustained decline,” he said.

Concerns are also emerging over the effectiveness of the policy in stimulating credit growth. Yusuf Rendy Manilet, a researcher at the Center of Reform on Economics (Core) Indonesia, noted that banks may prefer to allocate excess liquidity into safer instruments such as government bonds rather than extending loans to the real sector.

“As a result, the immediate impact is likely to strengthen financial markets rather than directly support economic activity,” Yusuf said.

The flexible nature of the funds adds another layer of uncertainty. While it gives the government agility in managing liquidity, banks may be reluctant to deploy the funds aggressively for long-term lending due to the risk of sudden withdrawal.

Telisa Aulia Falianty, a professor at the University of Indonesia, said such interventions should remain temporary to avoid creating dependency within the banking system.

“The long-term health of the bond market must still rely on fiscal credibility, not repeated liquidity injections,” she said.

The government’s latest move comes amid rising global volatility and growing pressure on Indonesia’s bond market. The yield on the country’s 10-year government bonds hovered around 6.85% in mid-March, reflecting external and domestic uncertainties.

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