Sri Mulyani warns of populist policies
Sri Mulyani warns of populist policies
JAKARTA (JP): Economist Sri Mulyani Indrawati has warned that
the populist measures being taken by the government to overcome
the economic crisis are leading the nation into bankruptcy.
The nation is deceiving itself because the populist measures
are wasting government funds at a time when state revenues are
drastically low, Sri Mulyani was quoted by Antara as saying in a
speech in Semarang on Saturday.
If this continues then within two or three years the economy
will deteriorate and the nation will enter into a period of "near
death", said the prominent economics lecturer from the University
of Indonesia in Jakarta.
The government is spending trillions of rupiah in subsidies to
appease and calm the people, but this is happening at a time when
its income is plunging, she said.
"I think collecting 50 percent of the targeted income tax
revenues for this year will be quite an achievement. Oil prices
are also falling, while the president's aides are asking for
money to carry out their own populist programs," she said.
The recent government decision to scale down increases in fuel
and electricity prices would only lead to the collapse of the
state oil company Pertamina and state electricity company PT PLN,
she said, adding that this raised the prospect of power blackouts
and massive fuel shortages.
President B.J. Habibie has made the provision of basic
foodstuffs his chief priority. He has heavily scaled down public
investment this year and reallocated scarce government funds to
subsidize food prices, particularly for rice.
In its latest move the government is launching a crash program
to sell rice at about one third of the market rate to 40 million
poor people who are most vulnerable to food shortages.
The government is also creating labor-intensive public works
projects to absorb the millions of people who have lost their
jobs since the economic crisis began to bite last year.
Habibie has secured agreement from the International Monetary
Fund (IMF) to continue providing subsidies on food, medicines and
fuel, which the latter had sought to bring to an end.
The IMF is expected to disburse the next $1 billion of its
promised $10 billion loan later this month. The Asian Development
Bank and the World Bank last week disbursed $1.5 billion and $1
billion respectively in fresh loans chiefly to finance the
country's social safety net program.
Sri Mulyani said Habibie would probably have to introduce
policies that would leave many people unhappy if he wanted to
lift the country out of the present crisis.
She said the government and the people should first forge a
common commitment to getting out of the crisis.
Once this had been achieved, everybody would have to be
prepared to accept tough and bitter measures to right the
economy, she said.
"We made too many mistakes during the 30 years in which we
enjoyed economic growth and prosperity. Now we're paying the
price," Sri Mulyani said as reported by Antara. (emb)
JAKARTA (JP): Economist Sri Mulyani Indrawati has warned that
the populist measures being taken by the government to overcome
the economic crisis are leading the nation into bankruptcy.
The nation is deceiving itself because the populist measures
are wasting government funds at a time when state revenues are
drastically low, Sri Mulyani was quoted by Antara as saying in a
speech in Semarang on Saturday.
If this continues then within two or three years the economy
will deteriorate and the nation will enter into a period of "near
death", said the prominent economics lecturer from the University
of Indonesia in Jakarta.
The government is spending trillions of rupiah in subsidies to
appease and calm the people, but this is happening at a time when
its income is plunging, she said.
"I think collecting 50 percent of the targeted income tax
revenues for this year will be quite an achievement. Oil prices
are also falling, while the president's aides are asking for
money to carry out their own populist programs," she said.
The recent government decision to scale down increases in fuel
and electricity prices would only lead to the collapse of the
state oil company Pertamina and state electricity company PT PLN,
she said, adding that this raised the prospect of power blackouts
and massive fuel shortages.
President B.J. Habibie has made the provision of basic
foodstuffs his chief priority. He has heavily scaled down public
investment this year and reallocated scarce government funds to
subsidize food prices, particularly for rice.
In its latest move the government is launching a crash program
to sell rice at about one third of the market rate to 40 million
poor people who are most vulnerable to food shortages.
The government is also creating labor-intensive public works
projects to absorb the millions of people who have lost their
jobs since the economic crisis began to bite last year.
Habibie has secured agreement from the International Monetary
Fund (IMF) to continue providing subsidies on food, medicines and
fuel, which the latter had sought to bring to an end.
The IMF is expected to disburse the next $1 billion of its
promised $10 billion loan later this month. The Asian Development
Bank and the World Bank last week disbursed $1.5 billion and $1
billion respectively in fresh loans chiefly to finance the
country's social safety net program.
Sri Mulyani said Habibie would probably have to introduce
policies that would leave many people unhappy if he wanted to
lift the country out of the present crisis.
She said the government and the people should first forge a
common commitment to getting out of the crisis.
Once this had been achieved, everybody would have to be
prepared to accept tough and bitter measures to right the
economy, she said.
"We made too many mistakes during the 30 years in which we
enjoyed economic growth and prosperity. Now we're paying the
price," Sri Mulyani said as reported by Antara. (emb)