Jakarta, June 22 (Antara) - The government and House of Representatives' Commission XI on financial affairs have agreed to revise down the nation's economic growth target due to the global economic slowdown that continues to affect several nations' economies.
The government had set the economic growth target at 5.3 percent in the 2016 State Budget, however, only 4.92 percent was recorded in the first quarter of 2016.
In order to meet the set target, the government should achieve a growth of 5.42 percent in the remaining three quarters, which is a challenging task, taking into account the current economic conditions.
Therefore, the government and Commission XI had agreed on June 7 to change the 2016 economic growth target from 5.3 percent to 5.1 percent in the draft 2016 revised budget.
This implies that with the 4.92 percent growth recorded in the first quarter of this year, the government has to achieve an economic growth of 5.16 percent in the remaining three quarters to meet the 5.1 percent target set in the draft revised state budget this year.
The Indonesian central bank, or Bank Indonesia (BI), has forecast that the country's economy would grow between 4.9 and five percent in the second quarter of this year, or falling slightly short of the target.
BI's Executive Director of Economy and Monetary Policy Juda Agung had stated on June 16 that the earlier estimate was slightly higher than five percent, but the latest assessment puts the growth rate at only 4.9-5 percent.
The economy grew stronger in the second quarter of 2016 but not in line with earlier expectations. Household consumption continued to be the key driver of the economy, which is forecast to grow ahead of Ied Fitr, when workers receiving holiday bonuses would have more to spend.
BI believes that several steps still need to be taken to boost domestic demand to strengthen economic growth. The country's economy is forecast to register a year-on-year growth of five to 5.4 percent in 2016.
In the meantime, the National Development Planning Agency believes that the assumed economic growth of 5.1 percent in the draft revision of the 2016 state budget is quite credible.
According to Bappenas Head Sofyan Djalil, the 5.1 percent target is quite credible. In fact, the IMF (International Monetary Fund) has projected it at 4.9 percent. But the IMF is known for being conservative. Thus, the government would better achieve a higher level than to peg it at a higher level, but that is not credible.
The relatively difficult global economy has affected the national economic growth rate since last year. The economy this year is also not as bright as many sides have expected, Sofyan Dalil stated.
The same optimism with the revised target at 5.1 percent growth is also voiced by Coordinating Minister for Economy Darmin Nasution. He described the country's economic growth target at 5.1 percent as realistic considering the prevailing condition globally and domestically. The global economic slowdown still has its impact on the domestic economy, which is also still hit by deep slump.
The global economy is still on the decline, but the domestic economy could still grow above 5 percent. Darmin said the government is struggling hard to escape the global economic malaise, but it cannot entirely safe from the impact.
Last year, the country's economy grew 4.79 percent or the lowest in six years , but in the last quarter of that year the economy grew slightly more than 5 percent.
Even though the government and Commission XI of the House has agreed a revised growth of 5.1 percent, of the Working Committee of the Budget Commission of the House of Representative in a meeting decided to set the economic growth target at 5.2 percent. It is 0.1 percent higher than agreed upon between the government and the Commission XI.
BI Deputy Governor Perry Warjiyo, who was also present at the meeting of the Working Committee said the target of 5,1 percent agreed earlier by the government and the House Commission XI was realistic considering the prevailing condition.
Yet, a 5.2 percent growth is still achievable by accelerating capital spending, which has contributed to the country's economic growth in the first quarter of 2016, Perry said.
He said acceleration of capital spending in the first quarter must continue in the following quarters this year , but state revenues must also be enough to finance the spending.
According to acting head of the Fiscal Policy Agency of the finance ministry, Suahasil Nazara, the 5.2 percent target set by the budget commission could be reached with good coordination between the fiscal and monetary authorities.
The government is ready to work hard to achieve the 5.2 percent target as the target figure is potential for the Indonesian economy, he said.
The target is achievable through good coordination between the fiscal and monetary authorities in pushing for structural reform in line with the series of economic policy packages launched by the government since last year, Suahasil said.
Since nearly this year, the monetary policy has been more accommodating and there is still room for synergy with the fiscal policy to boost economic growth. The 5.2 percent target figure is acceptable and the finance ministry is ready for that, he said.
***3***(A014/INE/o001)EDITED BY INE(T.A014/A/BESSR/O. Tamindael) 22-06-2016 15:09: |
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