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