IMF Survey: During 2015, Indonesia is One of Developing Countries with the Best Performance

By Office of Assistant to Deputy Cabinet Secretary for State Documents & Translation     Date 16 Maret 2016
Category: News
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President Joko Widodo accompanied by several high-ranking officials opens stock trade at Indonesia Stock Exchange at the beginning of January 2016

According to International Monetary Fund (IMF), Indonesia was one of developing countries that showed the best performance during 2015. This success is the result of good economic management as well as timely reforms, in particular for fuel oil subsidy.

The result of IMF’s assesment over Indonesia that is reported in Article IV Consultation and published at IMF’s website, on Tuesday (15/3) showed a significant strengthening in Indonesia’s policy framework during the last few years which has improved macro economic security so that it successfully strengthens macro economic stability and supports economic growth.

It makes Indonesia successfully minimizes the impact of difficult external fluctuation in 2015, that was marked by a decline of commodity prices, a shift in global financial condition, and slowing down growth in trading partner countries.

“During the last few years, good monetary management and wise fiscal attitude have strengthened macro economic stability and supported economic growth,” IMF Mission Chief for Indonesia, Luis E. Breuer, said as quoted from IMF website, on Tuesday (15/3).

According to Breuer, Indonesia’s economic performance during 2015 has shown good results, such as relatively high economic growth, on target inflation, and declining current account deficit.

“Indonesia’s macro economic performance in 2015 was good. Although external environment was weaker, the economic growth was one of the highest among developing countries, i.e. 4.8 percent in 2015. Inflation was declining to the range of central bank’s target (3-5 percent) and account deficit is decreasing,” Breuer explained.

However, to maintain the strong growth and development, IMF reminds the Government to encourage and broaden the current reform. It is important to increase infrastructure investment as well as to strengthen business environment and open trade opportunity.

For the record, the Article IV Consultation is part of IMF’s annual surveillance activity to all member countries. The assessment was done to monetary policy, fiscal, exchange rate, vulnerability risk emerging from capital flow volatility, as well as institutional and structural issues in Indonesia. The 2015 Article IV Consultation was held from 3 to 17 December 2015 led by Luis E. Breuer.

The World Bank

Meanwhile, the World Bank projects Indonesia’s economic growth in 2016 will reach around 5.1 percent and 5.3 percent in 2017. This figure is corrected 0.2 percent lower than the projection in December 2015. However, it means the World Bank saw an opportunity for improvement compared to Indonesia’s growth last year that was 4.79 percent.

World Bank Country Director for Indonesia Rodrigo A. Chaves said that the rate of Indonesia’s growth is still higher than other exporting countries. “Nevertheless, under 6 percent growth is not enough to accommodate 3 million Indonesia young people who enter labor market every year.

According to Rodrigo, the recovery of Indonesia’s economy depends on the policy to improve business climate and to attract more investors, as well as economic diversification. “A better improvement needs stronger private investment as well as comprehensive and sustainable policy to improve business climate,” he added.

On the same occasion, World Bank Lead Economist for Indonesia Ndiame Diop said that Indonesia still has a lot of industries that can be developed, such as manufacture. With the Government’s support, manufacture industry can support the increase of growth rate.

“However, these sectors must face a lot of regulation issues. The Government currently carries out a reform on the last six months. Several additional measures probably can ensure the investors and attract investment,” he said. (Humas Kemenkeu/ES)(MMB/YM/Naster)

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