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.