Government releases post-IMF economic reform blueprint
Government releases post-IMF economic reform blueprint
The Jakarta Post, Jakarta
The government pledges to continue selling its shares in a number
of banks next year as part of a crucial bank restructuring
program. This is contained in a document containing the
country's post-IMF economic reform program, a copy of which was
obtained by Dow Jones.
President Megawati Soekarnoputri was supposed to release the
blueprint on Friday when unveiling the 2004 state budget draft,
but it was postponed as the government still need to finalize the
programs, according to Coordinating Minister for the Economy
Dorodjatun Kuntjoro-Jakti.
"We'll publish it soon," he said. The blueprint is crucial as
it would help maintain investors confidence in the economy when
the current International Monetary Fund program end latter this
year. Presidential elections in 2004 could lead the government to enact
popular spending measures to create employment at the expense of
the country's finances, some observers fear.
Dow Jones said blueprint provided a timetable for the sale of
banking sector assets. The government plans to sell majority
stakes in Bank Lippo and Bank Internasional Indonesia by November
this year, and Bank Permata by February 2004. It planned to sell
around a 20 percent in unlisted state-owned Bank Rakyat Indonesia
through an initial public offering in September this year.
Also in September, the government hoped to pass a new money-
laundering law through the House of Representatives, according to
the blueprint.
The blueprint also set macroeconomic targets through 2006.
The country pledges to balance its budget by 2005 from a
deficit of 1.8 percent of gross domestic product this year.
Total debt will fall to 61.1 percent of GDP next year and 52.1
percent in 2005, from 67.2 percent this year.
To help attract foreign investment, the government promised in
2004 to streamline taxation and investment regulations. Indonesia
is coming under increasing pressure to create more jobs,
especially ahead of elections. Boosting private investment is
crucial at a time when the government's is under pressure to
continue fiscal belt-tightening measures.
Non-oil exports will grow 5 percent in 2004, and 6.5 percent
in 2005, up from 4.0 percent this year, the blueprint said. The
current account will shrink to US$4.3 billion next year, and $3.4
billion in 2005, from $5.1 billion this year, due to rising
imports. Non-oil imports will rise 9 percent in 2004 and 10.0
percent in 2005, from 9.5 percent in 2003. Foreign reserves will
fall to $33.7 billion in 2004 and $30.6 billion in 2005, versus
$35.0 billion this year.