The government would use various fiscal policies in its efforts to maintain the people`s purchasing power or consumption and their real income, finance minister expert staff for state spending Budiarso Teguh Widodo said.
Yogyakarta (ANTARA News) - Public consumption is expected to generate Indonesia`s economic growth which is set at 6.8 percent in 2013, finance minister expert staff for state spending Budiarso Teguh Widodo said.

"Like in previous years, the economic growth this year is expected to be boosted by public consumption. There are indications that public consumption will be strong this year with contribution to the economic growth reaching 3.1 percent," Budiarso told a seminar on fiscal policies 2013 and latest economic developments here on Thursday.

He said that the government would use various fiscal policies in its efforts to maintain the people`s purchasing power or consumption and their real income.

"The policies for that end could be adopted by increasing the non-taxable income of the people, social expenditure programs and adjustment of civil servants and military/police`s salaries," he said.

Besides public consumption, the country`s economic growth still had to be generated by investment, particularly the realization of foreign investment (PMA) and domestic investment (PMDN).

"The country`s PMA and PMDN performance is already relatively good. But the government stil have to maintain and increase it," Budiarso said.

He said that all sides need to work hard to maintain the stability of investment, economy and politics so that the trust of foreign investors could be preserved.

In the meantime, Finance Minister Agus Martowardojo has predicted the country`s economy will grow 6.5 percent this year falling short of the previously set target of 6.8 percent on impact of global economic crisis.

"We continue to do the best to reach the target of 6.8 percent but our estimate puts the growth at 6.5 percent," Agus said after a meeting at the House of Representatives last week.

He said the global economic crisis began to bite as obvious from the slowdown in the country`s investment growth in the past several months.

The high inflation in the past several months also cause concern, he added.

"We hope we would not miss too far off the projection of 6.5 percent such as last year because of low realization of capital spending," he said.

Last year, the country`s economy grew only 6.2 percent, he said, adding the growth could have reached 6.3 percent or 6.4 percent if the country had performed better in capital spending.

The country`s central bank has also shown that it has been over optimistic in setting its previous target.

Earlier this week, Bank Indonesia (BI) predicted the country`s economy would grow 6.2-6.6 percent this year falling short of its earlier target of 6.3-6.8 percent.

Bank Indonesia Governor Darmin Nasution said domestic demand is expected to remain high this year despite moderation.

"Exports would rise in volume to follow progress made in economic recovery in a number of the country`s main trading partners especially China," Darmin said.

The World Bank predicted the country`s economy would expand 6.2 percent this year. Asian Development Bank was more optimistic predicting a higher growth of 6.4 percent. (*)

Editor: Heru Purwanto
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