VIVAnews - Sri Mulyani Indrawati assumed the economic crisis in Europe may threaten economic threat to Indonesia in 2011.
This is considering the progress of debt crisis in several countries in the continent. Countries like Portugal, Italy, Spain, Ireland and Greece have the potential to suffer from serious fiscal condition with the ratio of government debt far beyond the agreed maximum level, which is 60 percent.
The condition has led to trust degradation towards government securities and the depreciated value of Euro.
“This has become a global threat due to the really expansive fiscal policy with a really high budget deficit level in a long period of time,” Mulyani said during a state speech on macro-economic framework in 2011 at the House’s 23rd Plenary Meeting on Thursday, May 20.
She also pointed out that the situation in Europe would potentially cause a wide-scale financial crisis because of the deteriorating trust systemic impacts. Meanwhile, the slump in the value of Euro and government securities could affect the condition of banks and the entire financial sector.
According to Mulyani, although generally the global economy has kept showing signs of recovery, the situation is still considered vulnerable. The global recovery is currently supported by global liquidity supplies through expansive monetary policy intervention and counter cyclical and massive fiscal policies in every country.
The April edition of World Economic Outlook is also still optimistic that the global economic growth is able to go from 3.9 percent to 4.2 percent.
Translated by: Nataya Ermanti