Govt expects higher growth<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Minister of Finance Boediono projected higher economic growth
\nfor next year on the back of improvements in investment and
\nexports, provided the upcoming 2004 legislative elections runs
\nsmoothly.<\/p>\n
Boediono, speaking during preliminary discussions of the draft
\n2004 state budget in front of the House of Representative's
\nbudget commission, said the economy would grow between 4 percent
\nto 5 percent next year.<\/p>\n
"If the 2004 election goes well ... I think by the second
\nsemester of the year, foreign investment will return," he said.<\/p>\n
This target is higher than projections made by the World Bank
\nand Asian Development Bank who predicted 4 percent growth.<\/p>\n
The two multilateral lenders also disagree with the
\ngovernment's 2003 growth target of 4 percent, saying the economy
\nwould only expand by 3.3 percent to 3.4 percent, down from 3.7
\npercent last year, thus worsening the unemployment situation.<\/p>\n
Boediono conceded that even with 4 percent to 5 percent growth
\nin 2004, it would not be able to resolve the severe unemployment
\nproblems. He said that the government had to be realistic in
\nsetting economic targets.<\/p>\n
The country's economy contracted by more than 13 percent in
\n1998 following the regional economic crisis. Since the crisis,
\nthe economy has only managed to grow at a meager rate of around 3
\npercent per year.<\/p>\n
Analysts have said that to resolve unemployment problems, the
\neconomy must grow at a pre-crisis rate of around 6 percent.<\/p>\n
Boediono said global economic conditions were expected to
\nimprove next year, thus providing opportunities for the country
\nto increase exports and lure more investment.<\/p>\n
Over the years, investment has been hard to come by because of
\ninternal and external factors, contributing little to the overall
\neconomic growth, which has been mainly relying on strong domestic
\nconsumption.<\/p>\n
The current global economic slowdown, exacerbated by the
\nrecent Iraq war and the outbreak of Severe Acute Respiratory
\nSyndrome (SARS), has shattered investors' confidence worldwide,
\nputting a lid on their appetites to invest in emerging markets,
\nsuch as Indonesia.<\/p>\n
On top of that, however, it is the adverse investment climate
\nhere, partly due to security concerns and rampant corruption,
\nthat have discouraged the flow of capital into the country.<\/p>\n
Security will be more of a concern when the election process
\nbegins next year. Traditionally, tensions rise whenever elections
\ntakes place due to increased political friction.<\/p>\n
However, Boediono remained optimistic on the prospects for the
\neconomy, despite the various uncertainties.<\/p>\n
"Even under the current conditions, take exports for example,
\nsome of our commodities are enjoying good bargains, in terms of
\nthe prices.<\/p>\n
"Oil is an obvious example, and so are some agricultural and
\nmining products. So, there is no need to be pessimistic. Our
\neconomy will be better in 2004 as investment and exports
\nimprove," he said.<\/p>\n
The state budget deficit for 2004 was earmarked at 1 percent
\nof gross domestic product, lower than this year's target of 1.8
\npercent.<\/p>\n
But Boediono did not provide specific details on how to plug
\nthe deficit considering that the country may no longer be able to
\nobtain debt rescheduling facilities from the Paris Club next year
\nif the existing International Monetary Fund (IMF) program is
\nterminated later this year as scheduled.<\/p>\n
He said the government would optimize potential revenue from
\nboth domestic sources, including divestment and privatization,
\nand foreign ones, which included seeking further soft-term loans
\nfrom the Consultative Group on Indonesia (CGI) and debt-swaps
\nwith other creditor nations.<\/p>\n
Govt economic targets<\/p>\n
----------------------------------------------------------<\/p>\n
2003 2004 *
\n-----------------------------------------------------------
\nInflation (%) 9 7 - 8
\nRupiah per US$ 9,000 8,500 - 9,500
\nGDP growth (%) 4 4 - 5
\nOil Price (US$\/barrel) 22 17 - 20
\nOil Output (bpd) 1.27m 1.1m - 1.5m
\nSBI (%) 13 10.5 - 11.5
\nDeficit (% of GDP) 1.8 1
\n-----------------------------------------------------------
\n* preliminary assumption
\nSource: Ministry of Finance<\/p>",
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