REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia predicts that credit may grow up to 14 percent this year surpassing the central bank's earlier predictions of 12 to 14 percent growth, the bank's Deputy Governor, Perry Warjiyo said here on Thursday.

He said the bank's decision that day to lower the key interest rate to 7 percent and the primary minimum reserve requirement in Rupiah (GWM) to 6.5 percent could contribute to increasing distribution of bank credits.

"Without reducing the GWM credits, we could still grow from 10.5 percent at the end of 2015 to 12.5 percent at the end of this year, but with the drop in GWM, the growth could reach higher at 14 percent," he said at a press conference.

As of December 2015, credits grew 10.5 percent (year-on-year), rising slightly from 9.8 percent in the previous month.

Third party funds in December 2015 grew by 7.3 percent, which was lower than 7.7 percent recorded in the previous month.

Perry said in terms of demand, several factors could affect it, such as interest, business prospects and government policies.

"Based on this we saw that demand for credits would increase and that is why we decided to reduce the BI interest rate," he said.

The acceleration of fiscal stimulus and bidding for government projects since last year and some of them have now started would also help increase credit distribution, including smallholders' credit (KUR), he said.

Bank Indonesia also predicted the country's economy could grow up to 5.4 percent this year.

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