Economic ministers agree to cool down economy

Economic ministers agree to cool down economy

JAKARTA (JP): There is agreement in the government on the need to cool down the country's economy, Minister of Finance Mar'ie Muhammad said yesterday.

Mar'ie said that all ministers responsible for economic sectors will be working hand in hand to slow the overheating of the economy without sacrificing the growth.

Mar'ie said that, in spite of the planned cooling down, the government would maintain an annual economic growth rate of above seven percent to help improve the prosperity of the people.

"A high rate of economic growth is important... in order to provide more employment opportunities," Mar'ie said.

He was speaking after launching, together with Minister of Tourism, Post and Telecommunications Joop Ave, the first-day covers of stamps specially issued to mark the 100th anniversary of state-owned Bank Rakyat Indonesia.

Mar'ie said that the economic ministers would not take any drastic measures in their efforts to cool down the economy.

During talks last week with Vietnamese President Vo Van Kiet in Bangkok, Thailand, President Soeharto acknowledged that Indonesia's economy is currently overheating, in a situation reminiscent of 1986, when the government devaluated the rupiah by 45 percent against the U.S. dollar.

Soeharto said that cooling down an overheating economy is much more difficult than encouraging economic activities for high growth.

Concurring with Soeharto's view, State Minister for National Development Planning Ginandjar Kartasasmita said on Tuesday that economic growth would continue by itself, especially given government policies which provide an attractive business climate.

Cooling down an overheating economy, on the other hand, needs concerted efforts on the part of both the government and the private sector, Ginandjar told a seminar.

Ginandjar said that economic overheating had not just happened this year or last year, but had been a "chronic problem" in Indonesia.

He said he preferred to lay most of the blame for the overheating on the continuing high current account deficit, rather than the high inflation rate.

He said that inflation rate, though still high, has been tending downward during the past three years: from 9.8 percent in 1993 to 9.4 percent last year and to a projected 8.5 percent this year.

By contrast, the current account deficit has grown over the past few years and is expected to increase further next year to more than three percent of the Indonesia's gross domestic product of some US$165 billion.

Mar'ie affirmed yesterday that the government would continue its prudent macro-economic policies and further deregulate the country's economy to provide a healthier basis for growth. (byi/rid)

Economy -- Page 5