Government ponders revising economic aim

Government ponders revising economic aim

JAKARTA (JP): The government may have to revise its
macroeconomic targets for this year if the rupiah continues to
weaken, a government adviser said on Tuesday.

Anggito Abimayu, a member of the National Economics Council
(DEN), said the targets seemed to be no longer realistic amid the
current condition.

"Yes, we'll review (the macroeconomic targets), checking to
see if the exchange rate (of the rupiah to the U.S. dollar) is in
line with the current condition and the projection for inflation
is correct or not," he said.

Anggito was speaking following a meeting between the
government and the visiting International Monetary Fund (IMF)
review team.

He did not elaborate any further.

There have been increasing calls for the government to revise
its macroeconomic assumptions for the 2000 state budget as the
rupiah has continued to weaken over the past month.

The rupiah closed higher at Rp 8,585 to the dollar on Tuesday
from Rp 8,608 on Monday following a statement from Bank Indonesia
deputy governor Miranda Goeltom that the interest rate on one-
month Bank Indonesia SBI promissory notes was expected to
increase at Wednesday's auction.

But Tuesday's closing is still much lower than the Rp 7,000 to
the dollar government target used in the 2000 state budget.

Minister of Finance Bambang Sudibyo, however, has repeatedly
rejected calls for the government to revise the rupiah
assumption.
"If we revise the exchange rate assumption, the market will think
we're nervous ... the market will think we can't cope with the
problem," Bambang told the House of Representatives during a
recent session.

He said the weakening of the rupiah was only temporary due to
noneconomic factors, and he was convinced the rupiah would
strengthen to the targeted exchange rate level.

Analysts have said if the rupiah continues to weaken, the
government inflation target of 5 percent to 7 percent for this
year would be surpassed because a weaker rupiah would inflate the
cost of imported goods.

The country's production system is still heavily dependent on
imported raw materials.

Analysts also said the weakening of the rupiah would affect
government spending and revenue, which in turn would affect the
overall state budget.

Bambang acknowledged this, but said the net outcome was still
benefiting the government.

The visiting IMF team started reviewing the implementation of
the country's key economic reform program on Monday. The team
will be here for two weeks.

Anggito said so far the implementation of the programs was on
track.

"What I've heard from the meeting today is that everything is
on track," he said.

DEN gives advice to President Abdurrahman Wahid on economic
issues as a second opinion. The council often attends Cabinet
meetings and government meetings with international institutions.

The IMF made the review amid a visit by World Bank vice
president for East Asia and the Pacific Jemal ud-din Kassum, who
met with representatives of Indonesia's main donor nations in
Jakarta on Tuesday.

Kassum also met with Vice President Megawati Soekarnoputri and
Coordinating Minister for the Economy, Finance and Industry Kwik
Kian Gie.

Kassum's visit is to make preparations for the next meeting of
the Consultative Group on Indonesia (CGI) in Tokyo slated for
October 17 and October 18.

The CGI, which groups Indonesia's major donor nations, pledged
in February some US$4.7 billion in loans to support the 2000
state budget.(rei)