Strong Dollar Affects CAD: Sri Mulyani
Strong US Dollar affects Indonesias current account deficit (CAD), instead of the countrys debts, according to Minister of Finance Sri Mulyani Indrawati.
“Every country has different level of vulnerability and Indonesia is facing the issue of current account deficit, Sri Mulyani said during an interview with Bloomberg on the sidelines of the World Economic Forum (WEF) for ASEAN in Hanoi, Vietnam, Wednesday (12/9).
She added that that Indonesian law stipulates that the current account deficit shall not exceed three percent of the Gross Domestic Product (GDP).
The Minister went on to say that the United States economic policy affects developing countries and the Indonesian Government responds to the latest economic development by reducing fiscal deficit and managing current account deficit by limiting imports.
The Indonesian Government, Sri Mulyani added, also pays attention to psychological factors and market sentiment to face global economic uncertainty and actively disseminate its policies to stakeholders.
In the meantime, the latest analysis of Japanese bank Nomura Holdings Inc. shows that there are seven developing countries in the world that face a major risk in overcoming the currency crisis. They are: Pakistan, Turkey, Sri Lanka, South Africa, Argentina, Egypt and Ukraine. Among those seven countries, according to the analysis, Argentina and Turkey are experiencing a currency crisis, while Argentina, Egypt, Sri Lanka and Ukraine have decided to take IMF assistance as a way to get out of the crisis.
Nomura’s analysis also revealed that there are eight countries with the lowest crisis risk, namely Brazil, Bulgaria, Indonesia, Kazakhstan, Peru, the Philippines, Russia, and Thailand.
“It is important not to generalize the risk of crisis to all developing countries,” Nomura concluded its report.
(Humas Kemenkeu/*/ES) (RI/EP/Naster)