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.