Boediono lays down four-phase strategy to sustain growth
Boediono lays down four-phase strategy to sustain growth
Dadan Wijaksana, The Jakarta Post, Jakarta
Minister of Finance Boediono said on Monday that Indonesia must
complete four major phases in its economic development if it
wants to achieve sustainable economic growth.
Currently, Indonesia was still half-way through the first
phase -- establishing stability in the country's macroeconomic
and fiscal condition, Boediono told a seminar on the economy here
on Monday.
"In this phase, the government has completed 50 percent of the
work, by lowering the deficit, reducing the default risk with
(debt) re-profiling, as well as reducing the debt burden," he
said, adding that the work had so far paid off.
He did not elaborate, but his remarks have been confirmed by
the recent upgrade in the country's sovereign ratings by global
agencies -- Standard and Poor's Rating Services and Moody's
Investors Services -- as recognition for progress the country has
made, particularly in the areas of reducing the deficit and debt
ratio.
As in the fiscal situation, macroeconomic indicators were also
improving, with easing inflation and the stable rupiah making it
possible for Bank Indonesia to keep reducing its benchmark
interest rate to help spur economic activities.
The second phase was aimed at strengthening basic
institutions, such as good governance and anti-corruption
measures to support the fiscal and macroeconomic stability, which
Boediono said had been mostly outlined in the reform targets
stated in the so-called White Paper document.
By successfully implementing those programs, Indonesia would
have an even sounder fiscal condition, with one of the targets to
reduce the country's debt ratio to less than 60 percent of gross
domestic product (GDP) by 2005.
Currently, the debt ratio is around 70 percent of GDP,
compared to around 100 percent about two or three years ago.
Moving to the third phase was a reform in microeconomic policy
as well as its supporting institutions, with boosting investment
and exports the main targets.
One of the tools to achieve that was reforming the country's
legal system to create legal certainty. He did not elaborate but
was obviously referring to Indonesia's much criticized judicial
system.
The last phase centered on the need for a program that
outlined a new economic development strategy to achieve
sustainable economic development.
Boediono said that among other things, contents that should be
taken into account were continued economic reform -- especially
in the public service sector, competition yet market-friendly
policies, providing increased attention to small and medium-scale
enterprises (SME) and improvements in infrastructure to
facilitate and speed up economic development.
Since the late 1990s economic crisis, Indonesia has been
struggling to reform its economy, which has partly resulted in a
growth rate of 3 to 4 percent over the past years.
The relatively meager growth was partly due to a lack of
stimulus from the annual state budget to generate higher levels
of growth, needed to help resolve the worrying unemployment
problem, analysts have said.