Indonesia must be prepared for US stimulus reduction: BI governor

"We must always be ready because sooner or later the stimulus will be reduced and that will affect developing countries including Indonesia," BI Governor Agus Martowardojo said.
Jakarta (ANTARA News) - Bank Indonesia (BI) Governor Agus Martowardojo said on Friday the government and BI had to be prepared well despite the U.S. Federal Reserve`s (Fed) recent decision to continue with its stimulus program.

"We must always be ready because sooner or later the stimulus will be reduced and that will affect developing countries including Indonesia," he stated when asked to comment on the U.S. central bank`s decision.

He further said that the Fed would still cut the stimulus although it would be done in stages.

Meanwhile, the global economy is expected to undergo changes, with developed countries` economies recovering and the economies of developing countries seeing relatively muted growth.

"Therefore we must be alert and take a stance which looks towards the future. Over time, the economy of developed countries would recover and interest rates would increase, which would affect developing countries including Indonesia," Martowardojo pointed out.

Developing countries that have unhealthy current accounts would be pressured more, he added.

"Indonesia must be able to use the current momentum to prepare itself well by conducting structural reforms or improving both monetary and fiscal policies, as well as their coordination."

Martowardojo also noted that structural reform had to be implemented immediately and must not be postponed, including infrastructure development, a solution for licensing and labor problems, coordination between the central and regional governments, as well as an improvement in the investment climate and exports.

"Certainly we must also boost investment to provide jobs, increase exports, as well as invest in building numerous upstream industries," he said.(*)

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