RI maintains 5% economic growth target for next year
RI maintains 5% economic growth target for next year
The Jakarta Post
Jakarta
Defying skepticism over Indonesia's economic prospects post-
Oct. 12, the government said it would maintain its 2003 economic
growth target of 5 percent even though it was revising downward
revenue targets for the year.
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
Jakti dismissed economists' concern of lower than expected growth
following the Bali terrorist attack.
"Five percent growth isn't dramatic; it would be ambitious if
it were set at 7 percent," Dorodjatun was quoted by Antara on
Monday.
Economists, however, disagree. Last week they scaled down
their 2003 economic growth forecasts from over 4 percent to
between 3 percent and 4 percent.
They said a further plunge in business confidence and a
reeling tourist sector would put a strain on the economy.
But according to Dorodjatun, the resumption of several major
construction projects this year could help offset the slump.
The government recently resumed a number of toll road, power
plant and petrochemical plant projects that were put on hold as
part of an entrenchment program following the 1997 economic
crisis.
Dorodjatun also said a stable rupiah would keep inflation in
check. About 70 percent of Indonesia's economy relies on consumer
spending, which in turn depends on the inflation rate.
His statement came as the government revises its 2003 budget
assumptions to reflect the economic fallout from the bombings on
Oct. 12 in Bali that killed nearly 200 people.
Weaker revenue will mean less government spending to drive the
economy. Domestic and foreign business is also likely to remain
sluggish because of an adverse investment climate, now worsened
by security scares following Oct. 12.
Vice President Hamzah Haz, who last week warned of a second
economic crisis, said that economic growth next year would drop
unless Indonesia shored up business confidence.
"It is therefore vital that we resolve the Bali case to
restore a sense of security and legal certainty," Hamzah said.
Analysts have estimated a growth rate of about 3.5 percent
this year, which would equal last year's growth.
Meanwhile, State Minister for National Development Planning
Kwik Kian Gie said Indonesia should cancel foreign loan-funded
projects valued at over US$800 million, explaining that these
projects required the government to invest money in them that it
did not have.
Kwik was referring to projects cofunded by the Consultative
Group on Indonesia (CGI), which groups Indonesia's major creditor
countries.
The office he leads, the National Development Planning Agency
(Bappenas), has identified projects valued at more than $800
million that Kwik says are unused debts on which Indonesia must
pay interest and other fees.
"If the projects haven't begun yet, we suggest the government
cancel them, return the debts and not pay the commitment fees,"
he said.
Speaking during a Bappenas seminar, he said the government
lacked the funds required to get the projects rolling.
Some of the CGI loans require the government to provide 20
percent of a project's value, with loans making up the rest.
Indonesia, with total debts of some $134 billion, is jostling
to cut its debt burden and unfreeze funds for productive use.
About 43 percent of this year's state budget has been allotted
to pay foreign and domestic debts, leaving little room for
development spending to spur economic growth.
Kwik did not specify over what period the projects were
spread, but said canceling them would provide a needed boost to
the economy.