Prijadi sees 5-6% annual GDP growth in 2002-2004

JAKARTA (JP): Finance minister Prijadi Praptosuhardjo said on Tuesday that the country's economy could grow by between 5 and 6 percent per year between 2002 and 2004, up from an estimated 3.5 percent in 2001.

But Prijadi said that such stronger economic growth would only materialize if the current uncertainty could be gradually eliminated.

"If this year we can register 3.5 percent growth, and over the next three years the economy can grow by an average of 5 percent to 6 percent per annum, then by 2004 the economy will have recovered to its pre-crisis condition," he said in a speech at a plenary session of the House of Representatives held to start the debating process on the government-proposed 2002 annual development plan.

"However, if (the economy) only grows by an average of 3 percent per year, then we will need between 6 and 7 years to return to pre-crisis conditions. In fact, if the uncertainty drags on, we could tumble into an even deeper crisis," he added.

"Right now, we're facing signs of a slower economic recovery ... the uncertainty factor is playing a dominant role in causing this slower recovery."

Prijadi emphasized that the current uncertainty was the result of domestic political instability, security problems, a weak legal system, and poor implementation of the regional autonomy and fiscal decentralization programs.

"... the problems cannot be overcome quickly. But looking forward, we expect the problems can be gradually resolved ... at least the uncertainty can be reduced," he said.

The main source of the current uncertainty has been the crisis of leadership as the embattled President Abdurrahman Wahid seems to have lost credibility following the recent issuance of a second censure by the House of Representatives which may lead to the initiation of an impeachment process.

Some legislators have upped the ante in their efforts to force Abdurrahman to step down so as to allow the popular Vice President, Megawati Soekarnoputri, to take charge of the country.

Several economists have said that the immediate resignation of Abdurrahman or the delegation of more power to Megawati would help resolve the national leadership crisis.

Reports said that Abdurrahman continued to search for a political compromise, although many believe that such a prospect is dim to say the least.

The economic crisis that started in the middle of 1997 has hit the country badly with gross domestic product (GDP) contracting by nearly 14 percent in 1998 forcing many companies and banks to the wall and leading to a record level of unemployment. The economic crisis also helped to oust former authoritarian president Soeharto from power.

The economy managed to grow at a surprisingly frisky 4.8 percent in 2000, led primarily by strong domestic consumption and exports.

But due to the current political turbulence at home, the government has to cut back the GDP forecast for this year to 3.5 percent, compared to earlier projections of around 5 percent.

Achieving pre-crisis level economic growth is seen as crucial in order to absorb the huge number of unemployed, which, according to the govenrment totaled more than 38 million people out of the country's more than 200 million population.

The economy was growing at a rate of more than 7 percent prior to the economic crisis.(rei)