IMF predicts higher than 4% growth for Indonesia

IMF predicts higher than 4% growth for Indonesia

JAKARTA (JP): International Monetary Fund (IMF) director for
Asia Pacific Yusuke Horiguchi predicted on Monday that
Indonesia's economy would grow by more than 4 percent this year
while inflation would remain in single digits.

Horiguchi, who succeeded former IMF Asia Pacific director
Hubert Neiss, said Indonesia had adopted "appropriate policies"
in its efforts to get out of its economic crisis.

"Indonesia's economic growth has shown progress," Horiguchi
told reporters after making a "courtesy call" on President
Abdurrahman Wahid.

"We believe the economic growth of 3 percent to 4 percent is
entirely within reach and could even be better, given the
strength of the fourth quarter last year."

According to the Central Bureau of Statistics (BPS),
Indonesia's gross domestic product (GDP) in the fourth quarter
rose 0.91 percent compared with the third quarter, or 5.76
percent year on year.

Indonesia booked a better than expected GDP growth of 0.23
percent for 1999, compared to a contraction of almost 14 percent
in 1998.

The bureau predicted that GDP growth this year could reach 4
percent. The Ministry of Finance predicted GDP growth of 3.8
percent.

Horiguchi also said he was confident inflation would remain
low at below 10 percent despite a planned increase in wages, fuel
and electricity rates.

The House of Representatives and the government have agreed to
raise fuel prices by 12 percent and electricity rates by 29.43
percent starting April 1. Meanwhile, labor wages are expected to
be raised by between 5 percent and 55 percent across the country
starting April 1.

"We have incorporated those factors in our inflation forecast.
The inflation picture will continue to be favorable," he said,
adding that the increase would have no lingering impact if
economic policies were right.

The bureau reported on Monday that Indonesia's inflation
increased by a lower than expected 0.07 percent in February from
January. The inflation rate in January was 1.32 percent.

Inflation for all of 1999 was only about 2 percent, compared
to a staggering 78 percent in 1998.

Horiguchi said Indonesia's economy, along with those in
Thailand, South Korea and the Philippines, was beginning to
escape its problems.

He noted that his meeting with Abdurrahman was to introduce
himself as the new IMF director for Asia-Pacific, replacing
Neiss.

He also said he wanted to show the goodwill of the IMF toward
Indonesia despite the occasional differences.

"Quite often on a day-to-day basis we have difficult
discussions, tense discussions and so forth," Horiguchi said.

"But I do not want that to (overshadow) the underlying
positive attitude of the international community and the IMF
toward the democratically elected President and his government
and their efforts to do the right thing for the people of this
country."

Coordinating Minister for the Economy, Finance and Industry
Kwik Kian Gie said Horiguchi was in Jakarta leading a technical
team from the IMF to review Indonesia's economic programs,
especially those incorporated in its letter of intent to the IMF.

The review is a condition before the IMF releases the next
disbursement of loans to the country. (prb/rid)