Indonesian govt pledges maximum efforts to meet 6.2 pct growth target

Indonesian govt pledges maximum efforts to meet 6.2 pct growth target

Chatib Basri. (ANTARA/Ari Bowo Sucipto)

So if the target is set at 6.2 percent 380,000 jobs would be lost."
Jakarta (ANTARA News) - The government has pledged to take maximum efforts to meet the 6.2 percent growth target set for the draft revised 2013 budget.

"Efforts will be taken by maintaining the current investment level or even increasing it by easing licensing procedures and accelerating spending," finance minister Chatib Basri at a meeting with the House of Representatives` Budget Committee here on Tuesday.

The meeting was also attended by central bank governor Agus Martowardojo, national development planning minister/head of the National Development Planning Board, Armida Alisjahbana and deputy finance minister Mahendra Siregar.

Chatib said the 6.2 percent growth target that has been set by the government was realistic as growth in the first quarter of 2013 was predicted to reach only 6.02 percent, due to slow investment as a result of a drop in imports by 15 percent.

"If until in the middle of the year the growth remains at a six percent level it would be difficult for the government to meet a 6.5 percent target due to absence of factual bases," he said.

Chatib said exports were also expected to drop as global economic conditions would not as yet fully recover until next year and commodity prices would still decline.

He said the 2013 economic growth would still hing on household consumption which is now the dominant contributor to the growth to make it stable at above six percent.

"This is what has made Indonesia`s economy grow better than that of Europe and the US which have so far still recorded a zero-to-one percent growth. So, a 6.2 percent growth target is relatively still better," he said.

Chatib said the assumed growth target of 6.2 percent had been set by considering potential widening in the budget deficit set at 2.5 percent of the gross domestic product, which may happen if revenue target is not met.

"Revenue target is set based on assumptions (macro) but spending is set based on rate. So, if the growth target is set at 6.5 percent deficit could be bigger than the target," he said.

The minister underlined the importance of the government to set a credible growth target based on current actual economic conditions to assure business.

A House of Representative member from opposition Indonesia Democratic Party Struggle (PDIP) faction, Dolfie Ofp, had earlier demanded a 6.5 percent growth target saying that 6.2 percent target is too low.

"By reducing the target from 6.8 percent in the 2013 budget to 6.5 percent in the revised budget a total of 135,000 jobs would be lost. So if the target is set at 6.2 percent 380,000 jobs would be lost," he said.

In the talks between the government and the House Commission XI only two macro-economic assumptions had been determined namely growth to be set at 6.2 to 6.5 percent and inflation at 6.0 to 7.2 percent.

The Budget Committee has approved the macro-assumptions in the draft 2013 revised budget namely rupiah exchange rate against the US dollar at Rp9,600, three-month rate at 5.0 percent, Indonesia Crude Price at US$108 per barrel, oil lifting at 840,000 barrels a day and gas lifting at 1,240,000 barrels of oil equivalent per day.

(Reporting by Satyagraha/H-YH/F001)

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