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Looking at the latest figures for April, Bank Indonesia is more optimistic than previously that credit growth this year will reach the upper range of its target of 17 percent to 20 percent.

The central bank’s director of banking research and super­vision, Halim Alamsyah, said on Tuesday that credit had grown significantly this month. As of April 13, outstanding loans had reached Rp 1,447 trillion ($160.6 billion), an increase of 13.25 percent from same period last year.

“Credit growth has expanded very fast lately. During the second week of April it grew 1 percentage point from 12.23 percent to 13.25 percent compared with the same period last year,” Halim said.

“Compared with the end of last year’s credit-growth figure it was up by 1.17 percent, while it was still negative in the previous week. Looking at the conditions, we expect that if the economy continues to improve and the global recovery goes on, then within the targeted credit growth of 17 percent or 20 percent it is likely that it will reach the upper range, or even reach the 23 percent average growth target set by the [banking industry],” he said.

The central bank had not determined which economic sector was driving the credit growth, but Halim said easing lending rates might have been a contributing factor. He said the base lending rate had slipped to 12.53 percent in the second week of April from 12.83 percent at the end of last year.

Halim said banks had enough liquidity to support the high credit growth.

Despite the seasonal tax payment that usually reduced lenders’ funds in the first quarter, Halim said that this year third-party funds only slipped by Rp 900 billion to Rp 1,962.6 trillion.

In contrast to its optimism about credit growth, Bank Indonesia has been concerned by an increase in undisbursed loans. According to central bank figures, total credit facilities not yet withdrawn jumped to Rp 495.59 trillion as of the end of February, compared with Rp 323.72 trillion last year.

“We are still studying the figures. We are trying to see whether it is because lenders are more aggressive in securing debtors or the customers are still being very careful in taking loans, or it may be because of the supply and demand,” Halim said. “But there might also be an error due to the revision of the lenders’ monthly report format.”

Bien Subiantoro, a director of PT Bank Negara Indonesia, said the high amount of undisbursed loans showed that lenders are getting more aggressive in securing their lending plans.

“Lots of loan deals for infrastructure projects were made early this year, but they withdraw these facilities in phases. That’s what causing the undisbursed loans to surge. Credit demand has improved, we see that demand from the trade sector rose and was one of the main contributors of loan growth in the first quarter,” Bien said.