November 28, 2019 / 1:43 PM / 16 days ago

UPDATE 1-Indonesia c.bank policy to remain accommodative in 2020-governor

* Room remains for accommodative policy - governor

* Policy mix to be expanded to support SMEs, tourism, exports

* BI has cut key rate 4 times by 100 bps since July (Adds details, more governor and president quotes)

By Gayatri Suroyo and Maikel Jefriando

JAKARTA, Nov 28 (Reuters) - Indonesia’s central bank vowed to keep its policy accommodative to support economic growth in 2020, after four rate cuts in 2019, its governor told an annual dinner with bankers and government executives on Thursday.

Bank Indonesia (BI) has cut its benchmark interest rate by a total of 100 basis points (bps) since July to counter the impact of slowing global growth on the domestic economy.

It has also cut banks’ reserve requirement ratio, or the amount of cash they are required to hold as reserves, and relaxed lending rules, trying to stimulate demand as growth slipped to the slowest in more than two years in the third quarter at 5.02%.

“In 2019, all instruments in our policy mix have been directed to support growth. We will continue with this accommodative policy mix in 2020,” Governor Perry Warjiyo said.

Warjiyo also said there remained room to make policy more accommodative - signalling the possibility of further rate cuts - though he also said utilizing such room would depend on data.

The policy mix would be expanded next year to also include measures to support small and medium enterprises, the tourism industry and exports, Warjiyo said.

Commercial banks were expected to increase the pace of loan expansion next year with the help of BI’s policy, he said without mentioning a figure. Last week, the governor said 2019 loan growth was forecast at 8%.

However, Warjiyo said monetary policy could not work alone in lifting growth.

“A central bank cannot be the only game in town. There needs to be a synergy in the national economic policy: monetary, fiscal and structural reforms,” he said.

President Joko Widodo, who also attended the dinner, said he fully supported BI and the Financial Services Authority in their policies and added he felt safe leaving his respected finance minister, former World Bank managing director Sri Mulyani Indrawati, to manage fiscal policy prudently.

Widodo promised to tackle “everything else”, including cutting oil and gas imports to reduce the current account deficit, speed up efforts for more domestic processing of natural resources and attracting foreign direct investment.

“The current account deficit disrupts the rupiah and our economic growth, that’s why I want to focus there,” the president said.

Indonesia’s economic growth is expected to slow to 5.05% this year, from 5.17% in 2018, according to government estimates.

The BI governor did not provide an outlook for GDP growth in 2020 on Thursday, but has previously said growth was expected to reach the midpoint of its 5.1%-5.5% outlook range. (Additional reporting by Tabita Diela; Editing by Alex Richardson)

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