Double digits loom as inflation rate rises<\/p>\n
JAKARTA (JP): The inflation rate is likely to approach the
\npsychological barrier of 10 percent this year in spite of the
\ngovernment's pledge to keep it below, a senior economist says.<\/p>\n
Anwar Nasution, speaking in a one-day seminar on the state
\nbudget, said on Saturday that this year's inflation rate will
\nlikely be higher than last year's level of 9.24 percent.<\/p>\n
The inflation rate reached 9.77 percent in 1993.<\/p>\n
Minister of Finance Mar'ie Muhammad told the House of
\nRepresentatives here last Friday that the government will make
\nconcerted efforts to keep the inflation rate at a maximum of five
\npercent in the coming years in order to improve the
\ncompetitiveness of Indonesia's exports.<\/p>\n
\"This year's higher inflation rate will be made possible by
\nincreases in salaries of civil servants and members of the Armed
\nForces and the obligatory rises of minimum wages as well as hikes
\nin electricity and telephone billing rates,\" Nasution told the
\nseminar, which was organized by the Jakarta-based Indonesian
\nManagers Club.<\/p>\n
The government announced a 10 percent increase in the salaries
\nof lower-ranking civil servants and members of the Armed Forces
\nbeginning in January and in April for the higher ranks. In
\naddition, private employers are required to raise the minimum
\nwages of their employees by a range between 11 percent and 35
\npercent, depending on their locations, by April 1.<\/p>\n
Nasution said that the rise of interest rates on banking
\ncredits, the marking up of project values by investors, the
\ndepreciation of the rupiah against major currencies and the
\nexpansion of money supply will also push up the inflation rate
\nthis year.<\/p>\n
Triggered by substantial increases in U.S. interest rates in
\n1994, Indonesian commercial banks have been forced to raise their
\ninterest rates by about two points in the past few months.<\/p>\n
Nasution explained that increases in salaries and wages will
\nnot only increase the demand for goods and services, but also
\npush up their prices.<\/p>\n
\"Unfortunately, the increasing demand is not offset by the
\ngovernment's deregulatory measures in the real sectors and rapid
\ndevelopment of infrastructure facilities, which can accelerate
\nthe distribution of goods and exports,\" he added.<\/p>\n
He also cautioned that increasing interest rates on credits,
\nnow approaching 20 percent per annum, might in turn affect
\nindustrial expansion.<\/p>\n
Like Nasution, senior economist Sumitro Djojohadikusumo
\npredicted last December that the country's inflation rate will
\nstill be running at a high level in the coming years. He
\npredicted an inflation rate ranging between 8.5 percent and nine
\npercent per annum until the end of the current Sixth Five Year
\nDevelopment Plan (Repelita VI) period.(fhp)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/double-digits-loom-as-inflation-rate-rises-1447893297",
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