President Susilo Bambang Yudhoyono said on Wednesday that his administration would counter the impact of the global economic recession next year with a fiscal stimulus package worth Rp 12.5 trillion ($1.15 billion).
Yudhoyono said the administration’s top priorities were combating inflation, supporting real-sector growth, sustaining consumer purchasing power, protecting the poor and maintaining economic growth.
“From the reports that I have received, from my point of view as the top decision maker, I can say that we are now ready for anything that might happen to the economy on the fiscal side,” Yudhoyono said on Wednesday afternoon after meeting Finance Minister Sri Mulyani Indrawati to discuss the 2008 national budget accounts and the government’s programs for 2009.
Yudhoyono said he expected the economy to have grown by about 6 percent in 2008, lower than 2007’s 6.3 percent, but warned that growth would slide significantly to “above” 4.5 percent next year. Analysts believe the country’s growth will slow rapidly next year, with estimates for full-year growth ranging between 3 and 5 percent.
Sri Mulyani said on Wednesday that the government also expected major job cuts, especially in the manufacturing sector, which employed around 12 million of the country’s 110-million strong workforce as of February 2008. Unemployment officially stands at 8.5 percent, but the figure does not include those who work only a few hours a week. Underemployment is estimated to be as high as 40 percent.
Speaking after a media conference that followed her meeting with the president, Sri Mulyani said the size of the fiscal stimulus package was likely to be further increased as she expected surplus funds to be left over from the 2008 budget.
The government has allocated
Rp 100 trillion for capital spending in the 2009 budget. Most of the money will go toward infrastructure projects, which the government hopes will provide much-needed employment and help maintain growth.
As 2009 will also see national legislative and presidential elections, Yudhoyono said that campaign spending should also help stimulate the economy.
The country’s economy grew 6.3 percent in 2007, its highest pace in a decade.