Jakarta. The government aims to write off non-performing loans provided by state banks to micro, small and medium enterprises (MSMEs) by May 2025, a minister said on Friday.

Last month, President Prabowo Subianto’s administration issued a regulation calling on state banks to forgive MSME debts to help small businesses recover and restart their economic activities without being hampered by debt. of the past.

“We have had six months to conclude the debt cancellation and we will ensure that the work is completed before the deadline,” MSME Minister Maman Abdurrahman told a news conference at his office in Jakarta .

Maman said he had met with members of the Public Banks Association (Himbara) to discuss ways to implement the regulations before the May 5 deadline.

Deputy Finance Minister Suahasil Nazara said recently that state banks were not able to write off all non-performing loans taken by MSMEs due to banking rules. The government has therefore published a regulation to provide the legal basis for this policy, which will also benefit farmers and fishermen.

He added that the Finance Ministry was currently developing guidelines for state banks to write off bad debts of MSMEs without seriously affecting their performance.

MSMEs represent more than 97% of business structures in Indonesia, making them the backbone of the national economy.

Finance Minister Sri Mulyani Indrawati earlier said the regulation aims to protect critical sectors, particularly in the country’s food security efforts. She said MSMEs need government intervention and support to grow their businesses.

“It is the government’s commitment to protect MSMEs and empower them to become resilient as they play a central role in the country’s economy,” the minister said.

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