Business | Economy
Savings worth $3.5b to help boost economy
Indonesia announced yesterday plans to spend rapidly $3.56 billion (Dh13 billion) saved from the 2008 budget on infrastructure projects and tax breaks to stimulate the economy and mitigate the impacts of the global economic crisis.
- By John Aglionby/Financial Times
- Published: 23:58 January 6, 2009
Jakarta: Indonesia announced yesterday plans to spend rapidly $3.56 billion (Dh13 billion) saved from the 2008 budget on infrastructure projects and tax breaks to stimulate the economy and mitigate the impacts of the global economic crisis.
Sri Mulyani Indrawati, the Finance Minister, said much more money could be available if conditions warranted it. She said this could come from either a $5.5 billion standby budget facility co-ordinated by the World Bank or new bonds.
She claimed international demand for Indonesian debt was mounting because yields were many times higher than anything available in the west.
Analysts say Indonesia's macroeconomic fundamentals are more robust than most countries in the region and much healthier than was predicted only two months ago.
This is thanks largely to exports accounting for only about 14 per cent of economic growth, which was about 6.1 per cent last year and is forecast to be between 4 per cent and 5 per cent this year.
However, they warn against complacency, citing the uncertainty of the global economy, the country's militant labour movement that could cause unrest if mass layoffs become necessary and the unpredictability of legislative and presidential elections in April and July, respectively.
Indrawati said the government would ask parliament to carry over Rp 51,300 billion (Dh16.86 billion) of surplus funds from last year's budget, but that a quarter of it would be allocated to routine expenditure in January and contingencies.
The funds, generated mostly from better-than-expected tax revenue, represent 4.9 per cent of the government's planned 2009 spending.
She did not specify how much of the stimulus would be allocated to infrastructure projects and how much to incentives to improve competitiveness and domestic demand.
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