Stimulus needed to maintain growth

Stimulus needed to maintain growth

Any Ratnawati. (ANTARA)

Jakarta (ANTARA News) - The Indonesian government will continue to provide fiscal stimulus to prevent the domestic economy from slowing down this year, Deputy Finance Minister Anny Ratnawati said.

"We provide stimulus to prevent the economy from slowing down to the extent that international institutes had predicted earlier," she said here on Wednesday night.

Anny further said the government is considering revising downward the country`s economic growth to 6.5 percent from 6.7 percent in the 2012 state budget, in view of the global economic uncertainties and the Indonesian crude price (ICP) averaging US$115 a barrel.

The lingering European crisis has led to a decline in the world`s purchasing power which, in turn, has reduced exports, one of the factors contributing to economic growth, she said.

"We are always convinced that our exports still can be increased. But who can ever survive if commodity prices continue to fall," Ratnawati said.

To boost domestic consumption in anticipation of an export shortfall, the government will increase capital spending to improve infrastructure facilities under the revised 2012 state budget, she said.

"We hope the revised state budget, which allows the reallocation of budget funds to the infrastructure sector, will maintain people`s purchasing power so that capital inflow goes to the real sector and not to investment portfolios, and we can minimize the risk of capital outflows," she said.

The skyrocketing ICP has prompted the government to raise the budget deficit to 2.2 percent in the revised 2012 state budget, she said.

This ongoing problem has caused difficulties to the government due to the absence of clear management of subsidized gasoline and diesel oil to safeguard the subsidy budget this year, she said.
(Uu.S012/INE/B/S012)

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