Key economic challenges outlined for new government<\/p>\n
JAKARTA (JP): State Minister of National Development Planning
\nBoediono said on Wednesday the next government would encounter
\nseverely strained budget resources, emphasizing that foreign debt
\nrescheduling measures would be imperative.<\/p>\n
Boediono said restricted government finances was one of the
\ncritical challenges the new government would inherit from the
\npresent administration.<\/p>\n
\"The other most pressing problems are a devastated banking
\nsystem, a highly indebted corporate sector, neglected
\ninfrastructures and greater demand for social safety net
\nprograms,\" he told the opening session of a two-day conference
\ntitled The economic issues facing the new government.<\/p>\n
Boediono said the huge cost of bank restructuring, debt
\nservicing burdens, consumer subsidies, the fiscal impact of
\ndecentralization of administration, civil service reform and
\ndecreasing foreign aid would put intense pressure on the state
\nbudget.<\/p>\n
\"Another foreign debt rescheduling of at least US$3 billion is
\ntherefore most imperative.\"<\/p>\n
The conference at the Shangri-La Hotel is organized jointly by
\nthe Institute of Economic and Social Research of the School of
\nEconomics, University of Indonesia, the United States Agency for
\nInternational Development and the Partnership for Economic
\nGrowth.<\/p>\n
The meeting, which features prominent Indonesian and American
\neconomists as well as economists from leading political parties,
\nis also a forum for vigorous discussions among economic advisors
\nand policy makers and those set to play a prominent role in the
\nnew government.<\/p>\n
Boediono did not elaborate on the economic challenges in
\nquantitative terms, emphasizing instead the qualitative extent of
\nthe problems facing the new government, which is expected to be
\nformed in December after the presidential election in November.<\/p>\n
Debt service burdens alone will be monstrously huge, not only
\ndue to the steep rise in foreign debts, but also because of the
\ngovernment's domestic borrowings through the issuance of treasury
\nbonds.<\/p>\n
Minister of Finance Bambang Subianto estimated late last month
\nthat interest payments on more than Rp 600 trillion ($77 billion)
\nin treasury bonds issued to finance the bank restructuring and
\nrecapitalization program, as well as the government guarantee
\nscheme for the banking industry, would be massive.<\/p>\n
Bambang estimated interest payments on the bonds at about Rp
\n62 trillion in the coming fiscal year starting in March, a
\nconsiderable increase from Rp 40 trillion in the current year.<\/p>\n
Boediono said serious attention must be given to the
\nmaintenance of infrastructures. He said such maintenance appeared
\nto have been largely neglected because the government had been
\nforced to meet contingency programs to cope with the crippling
\neconomic crisis.<\/p>\n
\"Poor infrastructures could damage the potential for new
\ngrowth,\" Boediono warned.<\/p>\n
He predicted implementation of a more intensive program to
\ncollect taxes to offset the anticipated decrease in foreign
\nloans. (vin\/rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/key-economic-challenges-outlined-for-new-government-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}