Govt vows to lower inflation<\/p>\n
JAKARTA (JP): The government, concerned over the high rate of
\ninflation in past years, pledged yesterday to make concerted
\nefforts to keep the inflation rate at a maximum of five percent
\nin the coming years, in order to improve the competitiveness of
\nIndonesia's exports.<\/p>\n
Minister of Finance Mar'ie Muhammad said that the government
\nwould maintain its cautious monetary policies to keep the
\ninflation rate low.<\/p>\n
The inflation rate was recorded at 9.53 percent in both 1990
\nand 1991 before falling to 4.53 percent in 1992. It surged back
\nup in 1993, to 9.77 percent, and reached 9.24 percent in 1994.<\/p>\n
\"The government agrees about the need for a further lowering
\nof the inflation rate to below five percent,\" he told a plenary
\nsession of the House of Representatives.<\/p>\n
The finance minister was replying to the House's questions on
\nthe 1995-1996 state budget during the plenary session, which was
\nchaired by House Deputy Speaker Surjadi.<\/p>\n
Mar'ie said lowering the inflation rate is part of the
\ngovernment's strategy for curbing the expected stronger pressure
\non the country's current account deficit in 1995-1996 fiscal
\nyear, which will begin in April.<\/p>\n
The low inflation rate is crucial, not only for promoting the
\ncountry's exports, but also as a means of discouraging imports,
\nthe minister said.<\/p>\n
\"In addition, a lower inflation rate will become a strong
\nstimulus to the growth of foreign investment,\" he said.<\/p>\n
Bank Indonesia, the central bank, plans to limit the growth of
\nthe money supply to 20 percent in 1995-1996 in a bid to reduce
\ngrowing inflationary pressure, while sustaining economic growth
\nat seven percent.<\/p>\n
The central bank has also reduced the target for the growth of
\nbank credits to 19 percent in 1995-1996, down from the 22 percent
\nprojected for this fiscal year, in order to prevent the economy
\nfrom overheating.<\/p>\n
Deficit<\/p>\n
House members cautioned the government over mounting pressure
\non the country's current account deficit in the next fiscal year.<\/p>\n
They said that imports, which are estimated to grow faster in
\nthe coming years as the consequence of faster growth in
\ninvestment, will put stronger pressure to the country's current
\naccount deficit.<\/p>\n
The current account deficit, which is projected to grow
\nfurther to US$4.09 billion in 1995-1996, compared with an
\nestimated $3.56 billion this fiscal year and $2.94 billion in
\n1993-1994.<\/p>\n
House members said that the current account deficit could grow
\neven more quickly than projected if the growth of exports is
\nslow.<\/p>\n
According to the Central Bureau of Statistics, Indonesia's
\nexports during the first eight months of 1994 increased by 5.8
\npercent to $25.51 billion from $24.11 billion in the same period
\nof 1993, while imports rose 11.8 percent to $20.15 billion from
\n$18.01 billion.<\/p>\n
Minister of Industry Tunky Aribowo said last week that the
\ngrowth of non-oil exports, which are expected to contribute about
\nthree quarters to the country's export revenues, might have
\nreached only around 11-12 percent last year, far lower than the
\ngovernment's target of 17 percent.<\/p>\n
Finance minister Mar'ie said yesterday that managing the
\nrupiah at a realistic level is also another important strategy in
\nstimulating exports.<\/p>\n
\"The realistic value of the rupiah will promote the
\ncompetitive edge of Indonesia's products overseas,\" he said.<\/p>\n
The minister said the government also promised to improve
\ncoordination in the management of its foreign debt to ensure that
\nloan repayment will remain at the safe level.<\/p>\n
President Soeharto unveiled the draft budget for 1995-96 early
\nthis month, which is estimated to balance at Rp 78.02 trillion
\n($36.28 billion) for both revenues and spending, an increase of
\n11.9 percent of that in 1994-95.(hen)<\/p>",
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