RI economy on the ment: Ginandjar

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)