Coordination called for to curb inflation rate

Coordination called for to curb inflation rate

JAKARTA (JP): President Soeharto ordered his cabinet ministers
yesterday to curb the inflation rate, which unexpectedly surged
to its highest level of 1.6 percent last month.

"The President ordered ministers to improve coordination to
enable them to affectively curb a further rise in the inflation
rate in the coming months," Minister of Information Harmoko told
reporters about the instruction made during the cabinet meeting.

Besides the inflation problem, the monthly meeting, which was
attended by ministers dealing with economic, financial, trade and
industrial affairs, discussed the latest developments in the
country's economy, ranging from exports to the supplies of
strategic products.

Harmoko said the surge in the inflation rate was caused by the
increase in the prices of food and housing, which respectively
grew by 1.34 percent and 2.31 percent.

"The rises in vegetable prices, for example, reached 5.40
percent, while those of foodstuffs is 5.26 percent," he said of
the rising inflation rate.

The increase in the consumer price index reached its highest
monthly level of 1.6 percent last month, as compared to 0.57
percent in March, 1.31 percent in February and 1.16 percent in
January.

The surge brought the cumulative inflation rate in the
January-April period to 4.75 percent, more than a half of the
inflation rates recorded in each of the last previous years.

The annual inflation rate slightly dropped to 9.24 percent
last year from 9.77 percent in 1993 and the government was
confident that the rate would not break 10 percent in the current
calender year.

Lending

The meeting also touched issues related to the requirement
imposed on commercial banks to allocate at least 20 percent of
their lending portfolios to small and medium-scale enterprises.

"President Soeharto asked the banking sector to fully abide by
the 20 percent lending requirement in efforts to support the
development of small and medium businesses in the country," said
the minister of information.

According to Bank Indonesia (the central bank), most local
banks have fully complied with the 20 percent mandatory lending.
But analysts said many banks are still half-hearted as many of
them, especially large banks, considered giving loans to small-
scale businesses too costly and instead bought the lending
portfolio of other banks in order to meet the requirement.

In yesterday's press briefing, the minister also reported on
the country's trade balance.

He said that Indonesian exports totaled US$3.42 billion in
February, while imports reached $2.98 billion, giving Indonesia a
surplus of $440 million from its foreign trade activities.

The export revenues comprised of around $816.9 million from
oil and gas and around $2.60 billion from non-oil products.

Harmoko said that there is no need for concern about the
supplies of strategic commodities such as cement, fertilizer,
cooking oil and steel despite the volatility in cement prices in
the last three weeks.

"The cement stocks for May were, for example, sufficient to
meet the projected domestic demand," he said, adding that the
prices of cement in most parts of the country have started to
decline and approach their reference prices.

In the tourism sector, the information minister said that the
number of foreign tourist arrivals through the country's seven
international gates reached 262,637 in March.

He said that the number of foreign tourists visiting the main
tourist destinations was 97.2 percent of the government's minimal
projection, or 91 percent of the maximum estimate.

In the January-March period, the total number of foreign
arrivals reached 819,686, 101 percent of the minimal target or
95.3 percent of the maximum projection, he said, adding that the
number was 8.35 percent higher than those registered in the same
period of last year.

He said that foreign exchange revenues from foreign tourists
during the January-March period totaled around $979.06
million.(hen)