Indonesia raises deposit guarantees to deal with credit crunch

Indonesia raised the value of guaranteed deposits as part of a package of new measures announced today to deal with the effects of the global liquidity crisis, the finance minister said.      

The government of South-east Asia's largest economy raised the value of guaranteed deposits from 100 million rupiah ($10,300) to two billion rupiah, Sri Mulyani Indrawati told reporters.      

Starting today, commercial banks are also allowed to use performing loans as collateral to get short-term financing assistance from the central bank, Indrawati said.      

The new measures were taken because "the government sees a threat from the global financial crisis that could destabilise Indonesia's financial system," she said.      

 

Indonesian shares dropped 3.1 per cent in morning trade today after reopening following a three-day suspension last week.      

Share trading was suspended after stocks lost 10 per cent in the morning last Wednesday, bringing losses for the week to more than 20 per cent.