Tue, 20 Feb 2007
The economy put on a spurt in the fourth quarter last year, with gross domestic product growing 6.1% year-on-year, according to Rusman Heriwan, head of the Central Bureau of Statistics (BPS).
The World Bank called for more government spending, say it had reaped a windfall of $15 billion and should spend it on poverty reduction.

Cutting fuel subsidies in 2005, declining interest payments on its debt and increasing revenues have handed Indonesia the largest increase in fiscal resources for development since the oil boom of the mid-1970s, the bank said in a review of Indonesia's public expenditure.

"Indonesia's post-crisis period is over: the country now has enough financial resources to address its development needs,"
Outgoing country director Andrew Steer said the government should raise infrastructure spending to 5.4%, outlaying another $6 billion a year, Agence France-Presse reported.

Steer added that money was already being well spent on education. "They now need to figure out how to also spend money well in infrastructure," he said.

In an article in The Jakarta Post on Monday (12/2/07) entitled ‘Opportunity knocks for Indonesia,’ Steer and colleagues Wolfgang Fengler and Soekarno Wirokartono noted that: “Indonesia's move to decentralization in 2001 has changed the fiscal fundamentals of the country, and it is particularly regional governments that need to spend money, not save it.”

On Tuesday, Vice President Jusuf Kalla said Indonesia had relaxed its ban on rice imports, saying it would be one of several instruments to control rising prices for the next few years until productivity can be increased to meet demand.

Kalla said Indonesia "won't ever stop" importing rice as he unveiled plans to buy 500,000 tons from overseas to stabilize prices.

There was positive news on infrastructure, with an advisory committee for a mass rapid transit (MRT) system in Jakarta announcing agreement on a Rp9 trillion ($991 million) line from Lebak Bulus in Jakarta’s south into the city.

The committee and the Japan Bank for International Cooperation (JBIC) said at a joint news conference on Tuesday that the project will be partly funded by loans from the JBIC, Reuters reported.

The MRT, planned to be 14.5 km long with 12 stations, is expected to start operations in 2014.

The Jakarta administration is also proposing to build a comprehensive flood prevention infrastructure in the capital and nearby provinces at a cost of Rp19.96 trillion, Bisnis Indonesia reported, quoting Jakarta Governor Sutiyoso, who said the projects should be completed in two years.



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