IMF sees stronger fiscal, monetary coordination<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The International Monetary Fund (IMF) foresees stronger
\ncoordination between the fiscal and monetary authorities in
\nnavigating Indonesia's economy through the high inflationary and
\nhigh-interest rate environment.<\/p>\n
\"We met today (Friday) with the new economic team and we have
\nstrong confidence in the good policy coordination between the
\ngovernment and Bank Indonesia,\" IMF Deputy Director of the Asia
\nand Pacific Department Daniel Citrin told a news conference on
\nFriday.<\/p>\n
Citrin, who ended a week-long visit in connection with the
\nperiodic, semester review of Indonesia's economy under the terms
\nof the IMF post-program monitoring, was referring to his talks
\nwith the new chief economics minister Boediono, finance minister
\nSri Mulyani Indrawati and Bank Indonesia's Burhanuddin Abdullah.<\/p>\n
He said he agreed with the immediate action agenda the new
\neconomic team would implement, including priming the economy and
\nconcrete measures to reinvigorate investment.<\/p>\n
\"It is important for the government to spend money next year.
\nHence, we don't have any disagreement with the government's plan
\nto accelerate budget realization to bolster growth,\" added
\nCitrin, who was accompanied by IMF senior resident representative
\nhere Stephen Schwartz.<\/p>\n
He said the government had saved by slashing fuel subsidies
\nand it was now time to inject the savings into the economy.<\/p>\n
He understood, though, the tricky job of the central bank in
\ngradually bringing down interest rates to support economic
\ngrowth, but he agreed with the government's prediction that
\ninflation could be brought down to between 8 percent and 9
\npercent next year from more than 18 percent (cumulative) this
\nyear.<\/p>\n
\"But we are highly confident about the fiscal sustainability
\neven though the government's domestic and foreign debt service
\nburdens will be much larger next year. After all, the fuel
\nsubsidies have been slashed and the government debt-to GDP ratio
\nhas declined to as low as 50 percent from more than 90 percent in
\n2001,\" he said.<\/p>\n
The high interest rates will increase the interest costs of
\nthe government's bonds, while the foreign debt service burdens
\nwill also rise significantly next year because the government
\nwill no longer get debt-payment deferment from the Paris Club of
\nsovereign creditors.<\/p>\n
Citrin said given the steady decline in the growth of gross
\ndomestic product in the first three quarters -- from 6.2 percent,
\nto 5.84 percent and 5.34 percent -- a trend that would most
\nlikely continue in the current last quarter, the growth for the
\nwhole year would only be slightly higher than 5 percent.<\/p>\n
That growth level would be similar to last year's economic
\nexpansion of 5.13 percent but much lower than the government
\ntarget of 6 percent.<\/p>\n
\"But I think the government growth target of 6.2 percent for
\nnext year is very difficult to achieve,\" he added.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-sees-stronger-fiscal-monetary-coordination-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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