Rupiah Anomaly and Under-Invoicing Cost State; BI Projected to Hold Interest Rate, 6% Flat KUR Boosts MSMEs

Recent developments show pressure on exchange rate stability and potential Fiscal losses, while the government attempts to drive the Real Sector. The Rupiah weakens despite the economy's solid foundation, leading to projections that BI will maintain the benchmark interest rate at 4.75%, with a possibility of a cut to 4.50%. On the other hand, Indef highlights the practice of Under-Invoicing, which costs the state tens of trillions of rupiah. To strengthen the Real Sector, the 6% flat KUR (People's Business Credit) interest rate scheme is expected to boost MSMEs' performance, although credit risk must still be anticipated.

Monetary authorities are facing a dilemma between maintaining exchange rate stability and the potential for policy easing. Economists reveal the 2025 Rupiah Anomaly, weakening amidst a strong Economy. This phenomenon indicates that exchange rate stability is influenced by factors outside domestic fundamentals, such as global sentiment. In response, Bank Indonesia (BI) is projected to hold the benchmark interest rate at 4.75%. This projection aims to maintain Rupiah stability amid the exchange rate anomaly, although economists predict that the BI Rate could drop to 4.50% if exchange rate pressure eases.

In the Fiscal sector, large losses threaten state revenue, demanding strict supervision. The Institute for Development of Economics and Finance (Indef) highlights the practice of Under-Invoicing, which costs the state tens of trillions of rupiah. This focus affirms the need for tight supervision in the export-import sector to secure fiscal revenue from illegal activities.

Meanwhile, the government remains focused on driving the Real Sector with credit risk mitigation. The provision of a 6% flat KUR interest rate potentially boosts MSMEs. This policy aims to encourage the Real Sector, but credit risk must be anticipated by banks and relevant authorities so that this program does not create problems in the future.

The pressure on the Rupiah (Exchange Rate Anomaly) and BI's effort to hold the interest rate underscore the focus on Monetary stability. Meanwhile, the government seeks to encourage MSMEs through the 6% flat KUR interest rate. On the other hand, the Under-Invoicing issue affirms a serious challenge in the Fiscal sector that requires decisive action to secure state revenue from illegal activities.

The latest developments show a policy tug-of-war between encouraging MSME growth through the 6% KUR interest rate and the need to maintain Monetary stability through the BI interest rate policy. All of this takes place amidst undue Rupiah weakening pressure and Fiscal losses due to Under-Invoicing practices.