BI chief sees BoP surplus<\/p>\n
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
\npredicted yesterday that Indonesia will continue to enjoy a
\nsurplus in its balance of payments next year, despite investors'
\njitters over the coming general election.<\/p>\n
"We foresee that based on continuing large capital inflows,
\nour capital account will be in surplus, which will be enough to
\nfinance our current account deficit. And our reserves will be
\nhigher," Soedradjad told a press conference here yesterday.<\/p>\n
The governor declined to predict the extent of the expected
\nsurplus.<\/p>\n
His remark came amid growing concern that Indonesia will
\nsuffer a negative balance of payments next year because general
\nelections generally discourage capital inflow and encourage
\ncapital outflow.<\/p>\n
The Institute for Development of Economics and Finance has
\npredicted that Indonesia will suffer a deficit of US$700 million
\nin its balance of payments next year, after a projected surplus
\nof $200 million this year.<\/p>\n
Soedradjad, however, believes that Indonesia Indonesia's
\nexport performance will improve this year and next, enabling
\ncontainment of any possible increase in its current account
\ndeficits.<\/p>\n
"I am not pessimistic about our export performance. It is true
\nthat the growth of our exports slowed down during the last three
\nyears, but not now," Soedradjad said.<\/p>\n
He noted that a number of leading export products, which
\nexperienced drops in growth in the past three years, have started
\nto grow significantly this year.<\/p>\n
Exports of textiles and textile products, for instance,
\nincreased by 2.8 percent during the first eight months of this
\nyear to US$3.9 billion from $3.8 billion in the same period of
\nlast year. Textiles represent 14 percent of Indonesia's total
\nexports.<\/p>\n
Although exports of wood products, which constitute 11 percent
\nof the country's total exports, dropped by 6.17 percent to $3.3
\nbillion in the first eight months of this year, from $3.5 billion
\nin the same period of last year, Soedradjad expressed optimism
\nbecause a number of export products, especially electronics and
\njewelry, are steadily gaining more popularity in international
\nmarkets.<\/p>\n
"When I was a junior minister of trade, I did not find export
\nfigures for jewelry products in our statistics. Now, these
\nproducts contribute some $300 million in foreign exchange,"
\nSoedradjad said.<\/p>\n
The governor noted that developed countries are projected to
\nenjoy better economic growth this year and next. This means that
\nthey will absorb more products from developing countries,
\nincluding Indonesia.<\/p>\n
Growth<\/p>\n
Soedradjad projected that Indonesia's economic growth will be
\nlower this year and next, standing at some 7.5 percent, compared
\nto 1995, which saw an 8.1 percent growth.<\/p>\n
"In fact 7.5 percent is already high, compared with our five-
\nyear plan target of only 7.1 percent per annum," Soedradjad said.<\/p>\n
Meanwhile, managing director of the International Monetary
\nFund Michel Camdessus commended Indonesia's economic performance,
\nsaying that growth has proven to be sustainable.<\/p>\n
As the country embarked on efforts to cool down economic
\noverheating, Camdessus noted that "reducing growth is not bad
\nnews at all as it contributes to establishing your growth on a
\nmore sustainable path."<\/p>\n
He noted that Indonesia still needs to pursue higher growth,
\nwithout economic overheating in order to provide more employment
\nopportunities, especially for "young intellectuals".<\/p>\n
To pursue high growth without causing overheating, Camdessus
\nsuggested that the Indonesian government continue to liberalize
\nits market, eliminate bureaucratic bottlenecks and provide a more
\nconducive climate for the private sector. (rid)<\/p>",
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