JAKARTA, July 29 (Xinhua) -- The International Monetary Funds (IMF) has
hailed the resilience of the Indonesian economy due to strong initial
fundamentals and appropriate policy responses, the group said in a statement at
its website on Wednesday.
The praise comes as the Southeast Asia largest economy has skirted the
worst of the global recession with positive growth of 4.4 percent at the first
quarter along with China and India, while others Asian neighbors befell it with
The Indonesian government is struggling to achieve equitable growth to
cushion the impact of the suicide bombings in two super tight-security
luxury-hotels on July 17, that killed 9 people and wounded more than 50 others.
"Executive Directors welcomed the resilience of the Indonesian economy,
which owed much to strong initial fundamentals and appropriate policy responses.
Private consumption, supported by the fiscal stimulus package, has kept growth
positive and among the highest in the region," the IMF said.
The group said that the country's financial sector had recovered from the
adverse initial impact of the global turmoil, and investor sentiment had
improved in recent months.
Yet, the IMF warned that another round of global risk aversion could
adversely affect external liquidity, demand, and growth prospects for Indonesia.
"It will therefore be important that the authorities strive to achieve the
appropriate policy mix, and promptly adjust it as needed, to preserve
macroeconomic and financial stability," it said.
As the government has launched 73.3 trillion rupiah (some 7.6 billion U.S.
dollars) stimulus package partly to finance a huge infrastructure projects as an
effort to cushion the fallout of the global financial routs in 2009, the group
gave their praise on it.
The group suggested to maintain some of the stimulus in 2010, given the
available fiscal space.
IMF also commended the authorities for the progress in fiscal reforms
toward a consolidated Treasury Single Account, simplified budget execution
procedures, and strengthened cash management.
IMF praised the monetary policy easing since December 2008, saying it was
timely and appropriate in the face of decelerating inflation and weakening
investment. The Indonesian The Indonesian central bank in July cut its benchmark
interest rate for an eighth straight month, putting the cumulative easing to 275
basis points since December,
The group encouraged the authorities to continue to strengthen the monetary
policy framework. "Strong commitment to the medium-term inflation targets, as
well as publication of inflation forecasts, would help guide inflation
expectations and enhance policy credibility."
The group forecast Indonesia's economic growth accelerated at the slower
pace to 3.5 percent this year and 4.5 percent in 2010 after reaching 6.1 percent
in 2008. The prediction is lower that the government target of around 4.5
percent this year and 5.5 percent next year.
Economic growth is expected to help reduce rising unemployment, which is
stand at 8.1 percent this year, in the country which some32 million people live
in less than 70 cents, according to the government data.
On exports, the IMF predicted it would growth minus 0.9 percent this year
and 0.5 percent next year.