Loans, projects to spur growth
Loans, projects to spur growth
Rendi A. Witular, The Jakarta Post, Jakarta
To stimulate higher economic growth through the utilization of
the state budget, the government is to speed up the disbursement
of massive loan commitments from overseas creditors within the
first semester of next year.
The amount of the loans that will soon be disbursed include
some Rp 9.9 trillion (US$1.01 billion) of program loans and
around Rp 25.2 trillion of project loans, Coordinating Minister
for the Economy Boediono said after a Cabinet meeting on
Wednesday.
"If we can speed up the disbursement, it will help drive
higher economic growth next year, as well as reducing the
revolving impact of this year's economic slowdown," said Boediono
in a press conference.
The government will accelerate and maximize its spending for
projects during the first semester of next year to help stimulate
the economy, with the private sector's financing access likely to
be hampered by the current tight monetary policy applied by the
central bank amid the high inflation and interest rates.
Boediono is optimistic that the private sector will revive
investment in the second semester after the central bank starts
to gradually lower its lending rates.
The government will also reduce bureaucracy barriers in order
to speed up the tender process of projects offered during
February's Infrastructure Summit.
Few investors are interested in taking part in the tender due
to reasons ranging from bureaucratic constraints to uncertainty
over land clearance procedures.
Of the total of 91 projects worth around $22.5 billion on
offer in the first edition of the summit, only four even managed
to get to the bidding stage, and only one project is currently
being carried out.
"We will see what kind of problems are discouraging investors
from participating. We will ensure them that the problems will be
settled as soon as possible and give ways for speeding up the
project construction next semester," said Boediono.
Indonesia, Southeast Asia's largest economy, is facing an
economic downturn this year after inflation accelerated to 18.4
percent between January and November, the highest in six years,
largely due to the government's decision to raise fuel prices on
Oct. 1.
To mitigate the inflationary pressures, the central bank has
aggressively raised its benchmark interest rate six times in the
last six months, with the current rate at 12.75 percent.
Higher inflation and interest rates have contributed to a
slowdown in economic growth and put the brakes on the country's
consumption-driven economy, as both consumer loans and credit for
business expansion become more expensive.
As part of an effort to anticipate a possible decline in state
revenues from taxes following a downturn faced by the business
community, the government is also planning to provide several tax
incentives and smoothen tax payments and reimbursements.
The Cabinet meeting also discussed issues related to security
and the social conditions next year, with Coordinating Minister
for Security and Political Affairs Widodo Adi Sucipto
highlighting some of the government's focus.
"In general, we will remain focused on settling issues related
to terrorism, corruption and drug trafficking next year. The
efforts to combat these three crimes will be intensified with an
emphasis on results," said Widodo.