Smallholder interest stays at 6% despite BI Rate hike: Hartarto

Jakarta (ANTARA) - Coordinating Minister for Economic Affairs Airlangga Hartarto assured that the increase in the BI Rate will not affect the government's Smallholder Business Credit (KUR), which remains at 6 percent per year.

He said here on Monday that the KUR interest rate is determined under a government subsidy scheme for micro, small, and medium enterprises (MSMEs), meaning it does not directly follow changes in the benchmark interest rate set by Bank Indonesia.

"The increase in the BI Rate does not change the 6 percent interest rate on the Smallholder Business Credit provided by the government. The 6 percent rate is a subsidized interest rate provided by the government for MSMEs," Hartarto explained.

He emphasized that the government will continue providing KUR interest subsidies to ensure affordable access to financing for MSMEs.

In addition, the minister said the government has increased the KUR lending ceiling for the housing sector to Rp50 trillion.

"The government has even increased the KUR allocation for the housing sector to Rp50 trillion. The interest rate remains the same under the KUR subsidy," he said.

KUR is a government-subsidized financing program aimed at expanding access to capital for MSMEs and other productive sectors.

According to the Ministry of MSMEs, KUR disbursement had reached Rp143.2 trillion as of June 25, 2023, equivalent to 49.3 percent of the 2023 target of Rp290 trillion.

The financing has benefited around 2.2 million MSME borrowers, including approximately 1.1 million new borrowers and 511 thousand borrowers who have upgraded to a higher business level.

Meanwhile, the share of KUR disbursed to productive sectors nationwide has reached 64.1 percent.

Furthermore, the government aims to disburse Rp290 trillion in KUR financing for 2023. This initiative is set to benefit 1.3 million new borrowers and 1.1 million graduating borrowers, with at least 65 percent of the funds dedicated to productive sectors.

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Translator: Shofi, Kenzu

Editor: Azis Kurmala

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