Skip to main content

IMF urges Indonesia to target inflation


Indonesia needs to bring inflation under tighter control and scrap policies that restrict spending in order to consolidate its nascent economic recovery, the International Monetary Fund has advised after its annual review of south-east Asia's largest economy. But the IMF praised the Indonesian government and central bank for their response to the global financial crisis and raised its estimate for economic growth this year to 3-4 per cent from 2.5 per cent.

Thomas Rumbaugh, the IMF mission leader, told the Financial Times that sound policies and a stable political environment had helped Indonesia attract comparatively more foreign capital as the global risk appetite had picked up.However, he cautioned that the fortunate timing of April's five-yearly legislative elections also played a role in the country achieving 4.4 per cent growth, year on year, in the first quarter of 2009. He said the 1.6m candidates and 38 parties injected enormous sums into the economy at a time when the government's stimulus package and central bank's rate cutting had yet to have an impact.The government has launched a Rp 73,300 bn ($7.3bn, ?5.3bn, £4.6bn) stimulus package, while the central bank allowed the rupiah to weaken from 9,500 to the US dollar to almost 13,000 in October and then gradually cut interest rates as the economy improved.Last Friday the rupiah strengthened to above 10,000 to the US dollar for the first time since last October.

Bank Indonesia cut its benchmark rate 25 basis points last week to 7 per cent, down 250 basis points from December.Mr Rumbaugh said he thought easing was now at or near an end, particularly considering the inflation forward indicators, such as rising commodity prices.Inflation is currently 6.04 per cent, year on year. The IMF expects it to fall to 5 per cent for 2009, low by Indonesian standards but higher than the regional average.

Mr Rumbaugh said: "I think the [economic and monetary authorities] would strengthen the credibility of their macroeconomic policy if they could get inflation down and reduce its volatility." He added that they also needed to create more fiscal space to spend more money on infrastructure and social protection."The revenue ratios are still very low. The number of registered taxpayers is very low."They've made some good progress in the last couple of years in that area but they've got a long way to go."
Labels:

Comments

Post a Comment

Popular posts from this blog

If Soeharto became National Hero

Three short years after his death, Indonesia's dictator Suharto has been   nominated to a shortlist to be designated a "National Hero." The final decision   rests with President Susilo Bambang Yudhoyono. and any honors will likely be   announced on November 10, Heroes’ Day. President Obama is scheduled to visit  Indonesia around that date.  After Suharto died in January 2008, Indonesia's former dictator General Suharto   has died in bed and not in jail, escaping justice for his numerous crimes in   East Timor and throughout the Indonesian archipelago. One of the worst mass   murderers of the 20th century, his death tolls still shock... We cannot forget that the United States government consistently supported   Suharto and his regime. As the corpses piled up after his coup and darkness   descended on Indonesia, his cheerleaders in the U.S. welcomed the "gleam of   light in Asia." In the pursuit of realpolitik, U.S. administration a...
2 comments
Read more

MUI Says Al-Qiyadah Al-Islamiyah is Misleading

The Indonesian Ulemas Council (MUI) said Al-Qiyadah al-Islamiyah, which first appeared in 2000, is a misleading sect. The decision was taken after MUI researched the organization for the last three months."Up to 2006, this sect wasn't brave enough to appear. But starting in 2007, they bluntly spread their lessons to the public," MUI Chairman, K.H. Ma'ruf, told the press yesterday (4/10). For a sect that is only seven years old, he viewed, its progress is rapid. The structure is in order and the leaders easily attract public sympathy. Al-Qiyadah's leader, Ahmad Moshaddeq, whose real name is Haji Salam, said he was an apostle since July 23, 2007 after ascetic meditation for 40 days and nights in Bunder Mount, Bogor, West Java. "They even changed Islam to existing apostle or prophet after Muhammad, that is Masih Al-Mau'ud," said Ma'ruf.For gaining devotees, according to Ma'ruf, Ahmad promised rewards of a motorcycle for those who can recruit 40 ...
1 comment
Read more

child sex workers in Bandung

A policeman, right, watches over two masseuses and their customers during a raid on suspected prostitution activities at a hotel in Changchun, in northeast China's Jilin province The Bandung authority is at loss to uncover cases of covert prostitution involving junior and senior high school students, whose number continues to rise in the West Java capital. Eli, a sex worker advocacy program mentor from the Rumah Cemara Group in Bandung, said it was hard to provide advocacy to teenagers involved in covert prostitution since most were not receptive. The number of those involved in covert prostitution is believed to be higher compared to commercial sex on the streets, she added. Eli has been providing support to more than 200 housewives and child sex workers over the past two years, around 20 of who are senior high school students between the ages of 15 and 16. "They are psychologically unstable at those ages. They are hard to handle due to their strong motivation to ea...
Post a Comment
Read more