Jakarta (ANTARA News) - The government believes the Indonesian economy will remain prospective in the next two years despite a global economic slowdown, a Finance Ministry official said.
"The Indonesian economy will remain prospective in the 2008-2009 period in which it will expand by a range of 6-6.5 percent due to strong domestic demand and investment," Anggito Abimanyu, chief of the ministry`s fiscal policy board (BKF), said here on Wednesday.
The country`s economic fundamentals would remain sound as reflected by Bank Indonesia (the central bank)`s stable interest rate, the rupiah`s stable exchange rate against the dollar and the rise in foreign exchange reserves, he said.
Realizing that the rise in food commodity prices would put pressure on inflation rate, the government would make every effort to prevent it from affecting the poor or the state budget, he said.
The soaring global crude prices which led to an increase in fuel subsidy had drawn the government`s attention, he said.
The government was in the middle of formulating strategies to allocate fuel subsidy in a proper possible way, he said.
In addition, the government was also studying a number of options with regard to fuel subsidy to create fiscal balance, he said.
The government realized whatever policies it had taken in relation to fuel subsidy would not satisfy all sides, he said.
Under the uncertain economic conditions, fiscal responsibility should top the list of the country`s priorities, he said.
If the strategy of adjusting fuel prices and compensating the poor for the rise in food prices was carried out properly, the vast majority of the Indonesian people would accept a change in fuel subsidy scheme and this would in the end raise the market`s confidence in the Indonesian economy, he said. (*)