Ministers told to fix meltdown<\/p>\n
Muninggar Sri Saraswati and Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
President Susilo Bambang Yudhoyono swore in six economic
\nministers on Wednesday, emphasizing the importance of improving
\nthe country's macroeconomic condition currently in a meltdown due
\nto higher inflation.<\/p>\n
\"The new economic team should immediately rehabilitate the
\nmacroeconomic condition by prioritizing efforts to curb
\ninflationary pressure in its fiscal and monetary policies to be
\ndiscussed in consultation with the central bank,\" he said.<\/p>\n
Susilo also urged the ministers to closely monitor and improve
\nthe distribution chain of goods as part of a move to help ease
\ninflation.<\/p>\n
The new ministers are Coordinating Minister for the Economy
\nBoediono, Coordinating Minister for People's Welfare Aburizal
\nBakrie, Minister of Manpower and Transmigration Erman Suparno,
\nMinister of Industry Fahmi Idris, Minister of Finance Sri Mulyani
\nIndrawati and State Minister for National Development
\nPlanning\/National Development Planning Board chairman Paskah
\nSuzetta.<\/p>\n
The swearing in took place two days after Susilo announced the
\n\"limited reshuffle\" in Yogyakarta in a bid to boost his Cabinet's
\neconomic team performance.<\/p>\n
Inflation accelerated to 18.4 percent between January and
\nNovember, the highest in six years, after the government more
\nthan doubled fuel prices on Oct. 1 due to rising global oil
\nprices and a plunge in the rupiah against the U.S. dollar.<\/p>\n
To ease the problem, Bank Indonesia has aggressively raised
\nits benchmark interest rate six times in the last six months. The
\ncentral bank raised on Tuesday its rate by another 50 basis
\npoints (bps) to 12.75 percent.<\/p>\n
Higher inflation and interest rates have contributed to a
\nslowdown in economic growth, from 6.2 percent in this year's
\nfirst quarter to 5.3 percent in the third. Higher interest rates
\nare also likely to put a brake on the country's consumption-
\ndriven economy, as both consumer loans and credit for business
\nexpansion become more expensive.<\/p>\n
Boediono, a former finance minister under president Megawati
\nSoekarnoputri, will work closely with Bank Indonesia to boost
\nefforts in stabilizing the rupiah to curb inflation.<\/p>\n
\"Part of our move to curb inflation is to maintain a stable
\nrupiah. The strengthening of the rupiah will help reduce the cost
\nof producing or importing goods,\" he said after the ceremony.<\/p>\n
The rupiah has been hovering at over Rp 10,000 against the
\ngreenback since August before climbing back at Rp 9,825 on
\nWednesday over optimism that the new economic team will bring
\ncrucial changes in economic policies.<\/p>\n
Sri Mulyani said other efforts to rectify the economic woes
\nwould include a plan to increase government spending for labor-
\nintensive infrastructure projects.<\/p>\n
\"Infrastructure spending is expected to boost productivity in
\nthe manufacturing and agriculture sectors. However, we should
\nalso maintain the spending balance to avoid higher demand for
\ngoods that could eventually trigger inflation,\" she said.<\/p>\n
Susilo's short-term instructions for the new ministers:<\/p>\n
1. Create job opportunities.<\/p>\n
2. Boost government spending for infrastructure projects that
\ncould help drive economic growth.<\/p>\n
3. Reactivate the real sector through the agriculture sector.<\/p>\n
4. Improve economic growth through investments and exports.<\/p>\n
5. Reduce poverty level and protect the economically
\ndisadvantaged from inflation by ensuring the effectiveness of the
\ncash assistance program.<\/p>\n
6. Bolster efforts to revitalize agriculture, forestry and<\/p>\n
fishery sectors as well as the small and medium businesses.<\/p>\n
7. Improve coordination and cooperation with the central bank<\/p>\n
in curbing inflation, strengthening the rupiah and lowering<\/p>\n
interest rates.<\/p>\n
8. Urge local administrations to allocate most of their<\/p>\n
budgets for labor-intensive projects.<\/p>\n
9. Accelerate reform in the tax regime, budget system and<\/p>\n
financial services sector.<\/p>\n
10. Intensify efforts to create good governance by eliminating<\/p>\n
the high-cost economy, illegal fees and corruption.<\/p>\n
11. Bolster efforts to combat bird flu and other transmutable
\ndiseases.<\/p>",
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