Recovery is getting clearer

Recovery is getting clearer

Several Indonesian economic indicators have improved. Take for
example, the rates of interest, inflation and rupiah exchange.

Late last week, Bank Indonesia lowered the maximum interest
rate of the government's blanket guarantee for third party
deposits. For the one-month period this June, the maximum
interest rate of government-guaranteed deposits became 16.73%.

The policy to ease the monetary level, although carefully
pursued, is, of course, based on reasonable assumptions. The most
important thing, for example, is the strengthening of the value
of the rupiah against the US dollar.

Before the rescheduling of the government's debts by the Paris
Club of creditor countries, and the BCA divestment, the rupiah
exchange rate against the dollar was above Rp 10,000. Yesterday,
the rupiah traded in the vicinity of Rp 8,500 per dollar.

Year-on-year inflation in May 2002 as against May 2001 was
12.93%. This has fallen when compared with year-on-year inflation
in February (15.13%), March (14.08%) and April (13.3%).

Thus, the economy is likely to grow.

True, it is feared that strengthening of the rupiah will have
an adverse impact, for example, causing exports to decline.

The reduction in bank interest rates, however, can also
encourage exports.

If this is indeed the scenario, it means that the direction
toward economic recovery is getting clearer. Now, what is left is
just the political factor. If there is nothing rocking the
present administration, it can be expected that the way toward
improvement will become smoother.

-- Bisnis Indonesia, Jakarta