Jakarta. Bank Indonesia has cut its loan growth forecast for the year following slow loan demand in the first six months, the central bank’s governor said on Friday.

“It [the credit growth] may not reach 15 to 17 percent, but 11 to 13 percent for the whole year,” Agus Martowardojo told reporters.

“We are going to discuss this matter at the next board of governors meeting and will officially announce the change immediately,” he added.

The central bank’s board of governors is set to meet on July 14.

Lenders in Indonesia have disbursed Rp 3,792.8 trillion ($284.64 billion) in loans for the year up to May, an increase of 10.3 percent from the same period a year before.

Agus said he still hoped credit growth would accelerate after the government begins disbursing funds for infrastructure projects in the second semester.

The government has earmarked more than $21 billion this year for building roads, bridges, airports, sea ports and power plants, but only 8 percent was spent in the January to July period due to red tape.

The central bank previously targeted 17 percent credit growth while the Financial Services Authority (OJK) aimed for 16.5 percent growth, referring to the local lenders business plan.

Bank Mandiri and Bank Rakyat Indonesia, the country’s first and second largest lenders by assets, targeted credit growth at 15 to 17 percent this year. Bank Central Asia, Indonesia’s largest private lender, set the credit growth target at 12 percent.

Bank OCBC NISP, the local unit of Singapore-based Overseas Chinese Banking Corporation, also revised down its loan growth target to 13 to 15 percent from initial target 15 to 20 percent, due to shrinking consumer loans and slowing small-medium enterprise loan growth, Parwati Surjaudaja, the president director of OCBC NISP, said on Friday.

The lenders’ total outstanding loans grew 13 percent to Rp 72.2 trillion, in the first five months this year, according to the latest available data.

GlobeAsia

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