Don't expect business as usual next year: Boediono
Don't expect business as usual next year: Boediono
Rendi A. Witular, The Jakarta Post, Jakarta
Minister of Finance Boediono warned bankers on Friday to
remain prudent as the economy would continue to face
uncertainties next year.
Boediono explained that the uncertainties escalated because of
possible political tension during the general election year and
at a time when the International Monetary Fund (IMF) would no
longer take an active role in designing the country's economic
programs.
"Don't expect business as usual this year and next year
because we are still in a phase of political and economic
transition. The country's condition will remain vigilant," he
said.
Boediono made the statement during the 15th congress of the
Federation of Private Domestic Banks (Perbanas). Perbanas
currently has 79 member private banks. Before the late 1990s
financial crisis, members totaled 166 banks.
The minister said the government had outlined several
strategies to help the economy survive the perilous period mainly
by maintaining macroeconomic and fiscal stability.
"The most important thing during the transition is that we
have to maintain a stable macroeconomic condition. Without it the
micro, or the real sector, which currently under performs, can
further plunge," he said.
He added that as this would be the main economic policy focus,
the government would not provide any fiscal stimulus package for
the business sector.
"There will be no stimulus for the micro sector next year
because our fiscal condition is still inadequate for that. I know
that our policy is conservative, but we need to be very careful,"
he said.
The government has implemented belt-tightening measures to
establish fiscal stability following the financial crisis with
the budget deficit this year expected to reach 2 percent of gross
domestic product (GDP). The budget deficit was about 3.7 percent
of GDP three years ago. Next year, the deficit is projected to
decline to 1.2 percent of GDP.
Over the past couple of years, the government has managed to
stabilize macroeconomic indicators. Inflation has declined
markedly and the government now expects it will be in the range
of 5 percent to 6 percent by year-end.
The government also managed to stabilize the rupiah at around
Rp 8,500-Rp 8,600 against the U.S. dollar.
During the banking congress, Boediono also said the absence of
IMF programs next year would become a challenge, especially in
gaining confidence from investors.
"The IMF's letter of intent has been considered by investors
and business people as the benchmark. Thus, we are now preparing
a new benchmark called the white paper," said Boediono, referring
to a document containing the government's post-IMF economic
programs.
He expected the white paper document to be published in the
middle of this month.
Boediono urged banks to monitor the implementation of the
economic programs set under the white paper document.
The Indonesian Chamber of Commerce and Industry (Kadin) has
set up a special unit to do the monitoring role.