JAKARTA: Indonesian government has designed moves to cope with much-anticipated economic hardships next year with apparent slowdown signals both in global and domestic economies.
However, despite the gloomy outlook, the government is still pinning high hopes on its growth to rise up to 5.9 percent next year.
“After learning from the existing various factors and indicators, economic growth is expected to be at a range of 5.3 to 5.9 percent next year,”Indonesia’s Financial Minister Bambang Brodjonegoro said here on Friday.
Bambang said that the nation’s economy would see major challenges next year, to come from five elements that comprised of limited fiscal room to support productive expenditure and priorities, not optimized budget spending, subsidy distribution issues, control on mandatory budget spending and control on primary balances.
Considering all of those challenges, government has renewed its macroeconomic and fiscal assumptions for next year.
Besides the growth target that was set up to 5.9 percent, inflation was expected at 4 percent plus minus 1 percent, crude price between 35 to 45 U.S. dollars per barrel, oil production between 740,000 to 760,000 per day.
The unemployment rate was targeted between 5.3 to 5.6 percent, poverty rate between 9.5 to 10.5 percent, Gini ratio at 0.38 and currency exchange rate between 23,650 to 13,900 rupiah per one U.S. dollar.
“To accelerate the growth, government has set some strategies, among others by improving the fiscal stimulus for state income, spending and financing sides,”the minister said.
He added that government had also prepared schemes to improve its management.”The fiscal continuity would be preserved by controlling the deficit, debt ratio and primary balances.”
Different from government’s growth target figure for this year, the central bank previously slashed its growth estimate to around 5 to 5.4 percent from a range of 5.2 percent to 5.6 percent this year.
“During the central bank governor board meeting in the last two days, we learned that world’s economy experiences sluggishness again, more severe that before,”Indonesian central bank, Bank Indonesia (BI), governor Agus Martowordojo said in his office on Thursday.
According to Agus, economy downturn has seriously affected Indonesia’s export and import activities.
Even though prices of several commodities have been slightly recovered, prices of oil and energy commodities would still remain low.
Agus said that the strained government’s spending and private investments in the first quarter this year have led the nation to see decreasing growth to 4.92 percent, lower than above 5 percent in the previous quarter.
“Even the growth figure was still adequately strong, sound domestic consumption and investment yet to be seen in that period,”he said.
According to Agus, the upcoming hearings on government’s tax amnesty initiative and revision of 2016 state budget would be the key factors to significantly affect the country’s economy soundness this year.
The tax amnesty initiative was highly expected to bring back domestic investors’funds deposited in foreign countries.
“Talks on those two issues would be very much essential to determine the sketch of the nation’s economic growth this year,”he said.
After seeing a 4.8 percent growth last year, Indonesia was estimated to see 5.1 percent and 5.3 percent growth in 2016 and 2017 respectively, the latest World Bank (WB) report on East Asia and Asia Pacific regions said.
The report said to accomplis the estimated growths would be very much depended on the government’s initiatives and pertinent efforts to implement its economic reform programs aimed at boosting investments and improve the infrastructure.
