Budget credibility, investor confidence top goals, says Indonesia minister

By Gayatri Suroyo and Randy Fabi

JAKARTA (Reuters) – Indonesia’s new finance minister Sri Mulyani Indrawati said on Friday her top priorities are to restore credibility in the state budget and to improve investors’ confidence in the economy.

“First (priority) is restoring the credibility of our budget,” Indrawati told Reuters in her first interview with the foreign media.

Indonesian Finance Minister Sri Mulyani Indrawati gestures during an interview with Reuters at Finance Ministry office in Jakarta, Indonesia, August 19, 2016. REUTERS/Beawiharta

Indonesian Finance Minister Sri Mulyani Indrawati gestures during an interview with Reuters at Finance Ministry office in Jakarta, Indonesia, August 19, 2016. REUTERS/Beawiharta

Over the past two years, perceptions had emerged that “all the figures in the budget have been decided in a way that created more questions rather than clarity,” she said.

Indrawati said she expects the economy to grow faster in the second half and post a full year growth of 5.2%, although she admitted that target would be “a little tough” to reach.

“I think that 5.2 is going to be possible but it requires a lot of hard work,” she said. “Demand side growth is still very bullish, inflation is very stable at this very moment and for Indonesia’s history it’s considered very low so that’s going to be something that will provide momentum for the domestic economy.”

“That will require a little bit higher than 5.2%, in the second half, a little bit tough I must say, but we’ll see.”

In the April-June quarter, Indonesia had better-than-expected annual growth of 5.18 percent. In the first quarter, the pace was 4.92 percent.

Indrawati, who was managing director of the World Bank for six years, also said the government’s tax amnesty programme has so far produced lower than expected revenue, but she is “cautiously optimistic” it would start to improve after September.

In the first month, the amnesty has brought in only a tiny fraction of the billions of dollars the government hopes will go into state coffers.

(Additional reporting by Hidayat Setiaji; Editing by Richard Borsuk)



Categories: Asia Unhedged, Indonesia

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