ndonesia has weathered a difficult year. The rupiah has come under repeated pressure, Bank Indonesia (BI) has intervened heavily to support financial markets, fiscal space has narrowed and global uncertainty remains high. Yet the recent moderation in oil prices, if sustained, provides an opportunity to strengthen Indonesia’s macroeconomic framework before the next external shock arrives.
Indonesia now faces an important choice. The current policy mix is costly to maintain while becoming less effective. Keeping the rupiah stable relies on foreign exchange intervention, regulatory measures and active liquidity management. At the same time, the central bank has become a key source of public sector financing while official intervention has expanded into areas normally performed by markets.
Each of these policy responses was introduced to address challenges as they emerged. Taken together, however, they point to a broader problem. Policy is substituting for markets while intervention is replacing flexibility.
No country can rely indefinitely on declining reserve buffers, expanding central bank balance sheets or replacing markets with official intervention. Ultimately, every macroeconomic framework depends on confidence — the willingness of households, businesses and investors to hold the country’s currency and financial assets. The opportunity today is to renew that confidence before markets force the adjustment.
For almost 80 years, the bebas aktif (independent and active) doctrine has guided Indonesia’s foreign policy. The same philosophy can guide economic policy. Bebas means designing policy around Indonesia’s own economic conditions rather than those of another country. Aktif means ensuring that every policy instrument serves a clear purpose while adapting to changing domestic and global circumstances.
This requires thinking about fiscal policy, monetary policy and financial markets differently. They should no longer be viewed as separate policy domains but as parts of a single macroeconomic system whose purpose is to preserve stability while supporting sustainable growth.
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Renewing that system requires three things: restoring coherence by giving every policy instrument a clear purpose; strengthening coordination so policies reinforce rather than offset one another; and improving communication so markets, businesses and households understand the strategy guiding policy decisions. Together these three principles build credibility.