RI economy on the ment: Ginandjar

JAKARTA (JP): Indonesia's tattered economy is on the right track and heading toward recovery in 1999, according to Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita.

Speaking at a mining and energy conference, Ginandjar said all macroeconomic indicators showed signs of recovery, including an easing of inflation, a strengthening rupiah and falling interest rates.

"We are beginning to see the results of the economic policies that we have been following. Indicators show that we are already well on the way to recovery," Ginandjar said.

Ginandjar predicted that inflation would fall toward 10 percent in 1999, close to levels last seen just before Indonesia was hit by the regional financial crisis in the second half of last year.

An official document recently prepared by the Ministry of Finance assumes that inflation will fall to between 15 percent and 20 percent next year.

Indonesia's consumer price index, the main indicator of inflation, inched up 0.08 percent in November, bringing the year- on-year inflation rate to 78.15 percent.

Ginandjar also said the market had recognized the improvement in Indonesia's economic outlook, resulting in a more stable rupiah.

He noted that the rupiah strengthened by 40 percent during October and then remained unaffected by political turmoil during the last three weeks.

The rupiah is currently trading at around Rp 7,500 against the U.S. dollar, compared to almost Rp 12,000 early September. However, the current level still represents a 66 percent drop from the pre-crisis level of Rp 2,450.

The finance ministry document forecasts that the rupiah will remain at between 7,000 and 8,000 next year.

Ginandjar also said that the Indonesian equity market had recently enjoyed a reentry of foreign capital, albeit very small.

"Although this is still a nascent development, it is beginning to contribute to the strengthening of the currency (rupiah) and demonstrates that there are powerful adjustment factors now at work, all pointing to the beginning of a recovery in 1999," he said. (jsk/rid)