Government amends GDP growth forecast to 2 percent<\/p>\n
JAKARTA (JP): The government is revising its economic growth
\nforecast for the 1999\/2000 fiscal year to 2 percent from an
\nearlier flat projection amid convincing signs of economic
\nrecovery, according to a senior government official at the
\nMinistry of Finance.<\/p>\n
The official, who declined to be named, said the more bullish
\nestimate was based on the fact that many economic indicators were
\nnow looking good.<\/p>\n
\"The IMF has also said economic sectors that contracted last
\nyear have now posted positive growth,\" he told The Jakarta Post
\nafter a meeting with senior economic ministers and officials from
\nthe International Monetary Fund (IMF) on Friday.<\/p>\n
The source also said that inflation for the fiscal year was
\nprojected to be between 8 percent and 10 percent, compared to
\nearlier forecasts of less than 10 percent.<\/p>\n
The government and the IMF started discussions on Friday on
\nthe country's next letter of intent to the Fund. The talks are to
\ninclude Indonesia's revised macroeconomic forecasts.<\/p>\n
The IMF's Asia Pacific director, Hubert Neiss, is expected to
\ncome to Jakarta this month to join the final rounds of the talks.<\/p>\n
The signing of the new letter of intent will pave the way for
\nthe disbursement of further loans from the IMF, which has a
\ncommitment to providing US$12.3 billion to finance the country's
\neconomic reform programs.<\/p>\n
Bank Indonesia deputy governor Subarjo Joyosumarto
\nacknowledged on Friday that the government was revising its
\nmacroeconomic assumptions.<\/p>\n
He declined to disclose the new assumptions, saying they were
\nnot yet final.<\/p>\n
Indonesia's economy has continued to show convincing signs of
\nrecovery.<\/p>\n
Gross domestic product grew by 1.82 percent in the second
\nquarter of this year compared to the same period of 1998 as
\nvarious economic sectors, including agriculture, mining,
\nservices, manufacturing and construction, started to grow.<\/p>\n
The economy contracted by 13.68 percent last year.<\/p>\n
Inflation in June was negative 0.34 percent, the fourth
\ndeflation month for four consecutive months. Inflation
\nskyrocketed to more than 77 percent last year at the height of
\nthe economic crisis.<\/p>\n
The central bank benchmark interest rate has also dropped to
\n17.15 percent, compared to last year's 70 percent.<\/p>\n
The rupiah has been hovering at around Rp 6,700 to the dollar,
\ncompared to more than Rp 14,000 last year.<\/p>\n
The government source said the benchmark interest rate was
\nexpected to further decline to around 12 percent to encourage
\nbanks to resume and thus stimulate economic growth.<\/p>\n
Meanwhile, another Bank Indonesia deputy governor, Miranda S.
\nGoeltom, said the benchmark interest rate should fall to around
\n15 percent later this month.<\/p>\n
She expected that banks could start lending in August,
\npointing out that it would no longer be profitable for banks to
\nkeep their third-party funds in central bank promissory notes due
\nto the declining interest rate.<\/p>\n
Indonesia's banking sector has been badly hit by the economic
\ncrisis. The high time-deposit rates and piles of non-performing
\nloans has made banks suffer negative interest rate spreads. Banks
\nhad to invest their third-party funds in central bank paper notes
\noffering high rates as no businesses could afford the high cost
\nof borrowing.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-amends-gdp-growth-forecast-to-2-percent-1447893297",
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