RI expects economy to pick up in Mid-2004<\/p>\n
Jenny Paris, Dow Jones, Phuket, Thailand<\/p>\n
Indonesia's economy should begin to post strong growth next
\nyear after uncertainty surrounding the July presidential election
\nsubsides, Finance Minister Boediono said on Friday.<\/p>\n
All aspects of the economy will be \"more manageable,\" Boediono
\ntold Dow Jones Newswires in an interview.<\/p>\n
\"Next year, if we're lucky, the investment climate will
\nimprove during the third or fourth quarter,\" he said at the end
\nof two days of talks among finance ministers of the Asia Pacific
\nEconomic Cooperation forum.<\/p>\n
The finance minister reaffirmed that he expected gross
\ndomestic product growth to accelerate to 4.5 percent next year
\nfrom an anticipated 4 percent in 2003.<\/p>\n
Presidential elections in Indonesia are scheduled for July 5,
\nat a time when President Megawati Sukarnoputri's leadership faces
\nthe challenge of surviving without International Monetary Fund
\n(IMF) support amid heightened terrorist risks.<\/p>\n
Moody's Investors Service Thursday warned that \"2004 will be a
\nrisky year for Indonesia with the elections coming up and the
\nthreat of terrorism.\"<\/p>\n
Last month, Indonesia outlined a raft of financial policies
\nfor 2004 in a bid to assure investors it will continue to manage
\nthe economy prudently next year without an IMF program. These
\ninclude measures to balance the budget by 2005 and to continue
\nreform of the financial system by selling stakes in state-owned
\nbanks.<\/p>\n
Some observers fear Indonesia's government will face pressure
\nto increase spending next year to boost employment ahead of the
\nelections.<\/p>\n
But Boediono said he didn't expect election spending to blow
\nout the budget deficit, which he expects to be capped at 1.2
\npercent of GDP.<\/p>\n
\"I'm quite confident once we come to an agreement with the
\nparliament (on the budget), we'll be able to cap the budget
\ndeficit at 1.2 percent of GDP, he said. \"In the proposed budget
\nwe have incorporated all necessary spending, including the cost
\nof elections, everything is already there.\"<\/p>\n
The country needs to raise about Rp 90 trillion next year to
\nrepay domestic and foreign debt, and cover its budget deficit. As
\nwell as issuing domestic bonds, the government plans a $400
\nmillion global bond early next yea. It also plans to sell state-
\nowned assets. And donors led by the World Bank are expected to
\nlend around Rp 20 trillion.<\/p>\n
Boediono reiterated government plans to issue Rp 28 trillion,
\nor about $3 billion, of domestic bonds next year, but noted that
\nnet debt issuance will be around $900 million after paying
\nmaturing bonds.<\/p>\n
He said the country was still set to launch the global bond
\nnext year but that the timing will depend on market conditions.<\/p>\n
\"If necessary, we can also raise the funds domestically,\" he
\nsaid.<\/p>\n
As for the debate over a U.S.-led campaign for exchange rate
\nliberalization by China and some other Asian nations - a topic
\nthat dominated the APEC talks, Boediono said he favored a slow
\napproach.<\/p>\n
\"As far as I know there has been no direct commitment to move
\ntoward exchange rate flexibility. Things need time to adjust,
\neverybody recognizes that,\" he said.<\/p>\n
APEC members Friday rebuffed U.S. Treasury Secretary John
\nSnow's push to have China unhitch the yuan from the dollar,
\nagreeing only on a vague call for \"appropriate\" currency policies
\nand merely noting Snow's campaign for \"flexible\" currency
\nsystems.<\/p>\n
Boediono voiced support for Beijing's determination to
\nliberalize its exchange rate regime at its own pace.<\/p>\n
\"Some of us are practicing fixed-exchange rates. Every country
\nhas its right to introduce the appropriate exchange rate system
\nfor its economy,\" he said.<\/p>",
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