IMF warns RI of challenges ahead<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
More prudent budgeting and the removal of fuel subsidies are
\nimportant challenges ahead for the government, if it wants to
\nconsolidate the progress Indonesia has made in recent years, the
\nInternational Monetary Fund says.<\/p>\n
In its latest review of Indonesia's economy, the IMF's
\nExecutive Board said in a statement it "welcomed the continuing
\nimprovement in the overall performance of the Indonesian economy
\nin recent years.<\/p>\n
"Which has been manifested in the considerable progress toward
\nachieving macroeconomic stability, lowering public debt,
\nrestoring the health of the banking system, and reducing
\nvulnerabilities."<\/p>\n
The IMF, however, said Indonesia still faced key policy
\nchallenges in stimulating economic growth to create jobs and
\nreduce poverty.<\/p>\n
"Further fiscal consolidation is a key priority in the
\nauthorities' strategy to lay the basis for sustained economic
\ngrowth," it said, welcoming the recent revision of the 2005 state
\nbudget, which reflected more realistic assumptions and aimed for
\na reduced deficit.<\/p>\n
The IMF also stressed the importance of reducing fuel
\nsubsidies, which have put much stress on the budget amid rising
\nglobal oil prices.<\/p>\n
On the central bank, the IMF commended Bank Indonesia (BI) for
\nits continued tight monetary policy and its focus on containing
\ninflation through its newly introduced benchmark interest rate
\nscheme.<\/p>\n
"Convincing use of the new interest rate policy will help
\nmaintain stability and enhance confidence," it said, adding that
\nfurther tightening might still be desirable in view of the recent
\npressures on inflation and the exchange rate because of their
\npossible effect on economic growth.<\/p>\n
The IMF also recommended BI limit its interventions into the
\nforeign exchange market to those needed to counter short-term
\nvolatility.<\/p>\n
The review is part of IMF's non-binding, post-program
\nmonitoring with Indonesia, which began last year after Indonesia
\nended its program under the IMF following the 1997 Asian
\nfinancial crisis.<\/p>",
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