Economy Remains Steady Ahead of Elections, Sri Mulyani Says

Finance Minister Sri Mulyani Indrawati attends Fitch Ratings event: Fitch on Indonesia 2019, at Mandarin Hotel, Jakarta, Wednesday (20/3). (Photo by: Ministry of Finance PR)

Indonesian Minister of Finance Sri Mulyani has ensured business players that country’s economy will remain steady in this political year.

She also urged business players not to worry about rising political temperatures in the country.

“The Government is committed to pursuing policies to support a conducive business environment to facilitate investors in doing business in Indonesia,” the Minister said at the 2019 Fitch Ratings Fitch on Indonesia held under the theme “Fitch on Indonesia – The Election, Macro-Economy and Credit Market” at Mandarin Oriental Hotel, Jakarta, Wednesday (20/3).

Sri Mulyani went on to say that her Ministry and related stakeholders would continue to carry out fiscal policies that support investment climate and increase domestic competitiveness through strengthening export capacity.

She added that the Government will also continue to increase the total spending by allocating total funds of more than Rp2,490 trillion and the deficit is projected at 1.83 percent of gross domestic product (GDP) which is consistently below the two percent limit. “We will use this fiscal policy with budget allocations in sectors that are fundamental to Indonesia and our economy,” she said.

The fundamental sectors, the Minister added, are human resources empowerment through education, health, and social safety nets including poverty alleviation.

The Minister added that the Government would also continue to allocate 20 percent education funds of the total state budget (APBN), five percent for health and for social safety nets, including for poverty alleviation, which in 2018 was successfully reduced to 9.66 percent – the lowest poverty rate so far.

However, she surmised that main issue of improving the quality of Indonesia’s human resources is not on the amount of money allocated but on how and on what allocation the money will produce optimal point. For example, she added, at the optimum point, what will be the balance of funds allocated for general education and vocational trainings, as well as research.

In health sector, the Government also continues to pursue policies that can provide sustainable health facilities for communities that do not burden providers of health facilities, she said

Another focus, according to Sri Mulyani, is infrastructure development sector which has been the Government’s top priority for the past five years, adding that several strategies carried out by the Government include promoting public-private partnerships in infrastructure development that reaches inter-regional connectivity in Indonesia. Meanwhile, some fiscal policies to be implemented include government guarantees and availability of payment schemes, she added.

As for regional empowerment, Sri Mulyani maintained that the central Government is committed to allocating budget to regions through regional transfers and Village Funds, which have been proven to be able to empower regions and reduce rural poverty through economic empowerment and infrastructure development.

Former World Bank managing director reiterated that the 2019 elections are not an obstacle to investment and business in Indonesia, while noting the success of the Indonesian Government in managing its economy amidst world economic turmoil in 2018 and the focus of government policy on fundamental sectors in 2019.

“I want to ensure that the election, macro-economy, and credit market are not to be a trade-off as they can support each other in Indonesia,” she said. (PR of Ministry of Finance/ES)

Translated by: Muhardi

Edited by: M. Ersan Pamungkas