NATIONAL BANKS NOW IN RELATIVELY STABLE CONDITIONS : BI

Jakarta, March 5 (ANTARA) - Bank Indonesia (BI/the central bank) said national banks were now in relatively stable conditions as reflected in various indicators of their development and soundness.
The national banks' liquidity conditions, including liquidity flow in the inter-bank money market, are now improving compared with several months earlier, BI said in a press statement made available to ANTARA here on Wednesday.
In the meantime, credit provisions showed a decline by 2.1 percent in January 2009 due to the economic downturn and banking prudence in channeling credits.
Despite these facts, however, BI would continue to keep an eye on the possibility of increased risks from banks' non-performing loans.
The central bank predicted that the economy would grow at 4 percent in 2009 with a relatively big downside risk, particularly when the global economy continued to worsen more than expected.
BI said a slowing of the economy was reflected in the decline in household consumption due to the weakening of the people's purchasing power and downward trend in the amount of money in circulation.
But on the other hand the decline in money in circulation would also help reduce inflationary pressures so that inflation tended to stay at the lower end of the five to seven percent range.
Bank Indonesia would continue to keep an eye on the financial and economic developments in order to enable it to take appropriate steps to strengthen the domestic economy and marcro-economic stability as well as the financial system.
In the meantime, inflationary pressures in February were still relatively low, namely 0.21 percent, which is far lower than its historic rate, so that the year-on-year (YOY) inflation in January was recorded at 8.6 percent.
The country's foreign exchange reserves at present were still recorded at US$50.56 billion or equivalent to the amount needed to finance imports and pay external debts for 5.4 months.
The foreign exchange reserves will increase with the proceeds of the government's global bond sale worth US$3 billion