The stability of the Rupiah exchange rate does not depend solely on\nthe monetary policies of Bank Indonesia or the Minister of Finance, but\nis also heavily determined by the government\u2019s credible and sustainable\nfiscal management. This was stated by Rita Santoso, Rector of the ASIA\nInstitute of Technology and Business Malang, in response to the\npressures still shadowing the Rupiah amidst global economic uncertainty\nand rising geopolitical tensions.<\/p>\n
As is widely known, many parties suggest that fiscal deficit limits\nare contributing to the weakening exchange rate, amid rumours that the\ngovernment may raise the fiscal deficit limit above 3%. Rita\nacknowledged that financial markets will closely scrutinise the\ngovernment\u2019s ability to maintain fiscal health through budget deficit\ncontrol, prudent debt management, and the effectiveness of state\nspending in driving economic growth.<\/p>\n
She noted that this is not solely the responsibility of the Minister\nof Finance, but a duty of the government as a whole. \u201cRegarding state\nfinances, the Minister of Finance has endeavoured to keep them healthy.\nState expenditure remains within safe limits, the deficit is below 3%,\nand debt is at 40% of GDP, which is normal for an economy of our size,\u201d\nRita explained in her notes shared on Instagram.<\/p>\n
However, she assessed that maintaining market confidence is not the\ntask of the Ministry of Finance alone. Market trust is built through the\nentirety of governance\u2014how programmes are implemented, how policies\nsupport one another, and how the government proves its ability to fulfil\nits promises. \u201cThat is the responsibility of the entire government, not\njust one ministry,\u201d<\/p>\n
Rita observed that the Indonesian economy across various regions is\nstill functioning, with various government programmes distributing funds\nto the public and driving consumption. However, this situation is often\naccompanied by various rumours and negative issues. In response to\ndiscussions regarding a potential change in the Minister of Finance, she\nquestioned whether the current challenges truly stem from fiscal\nmanagement.<\/p>\n
Rita emphasised that a primary indicator for investors, businesses,\nand the public is future expectations. She believes Indonesia\u2019s current\nissue is not a lack of ideas for progress, but rather a lack of\nreadiness in execution. To achieve sustained high per-capita income\ngrowth, she stated that Indonesia requires four main pillars: robust\ninstitutions, a healthy and educated population, and adequate\ninfrastructure.<\/p>\n
Of these four pillars, Rita noted that institutions are often\nconsidered the most fundamental. Robust institutions imply secure\nproperty rights, laws and contracts enforced fairly, and limited power\nto ensure business is conducted equitably. \u201cWithout this, people will be\nreluctant to do business, invest, or innovate,\u201d she concluded.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-under-continued-pressure-is-the-fiscal-deficit-to-blame-1780800207", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }