Bank Indonesia Expects Govt Spending Boosts Economic Growth

• Aug 24, 2017

TEMPO.CO, Jakarta – Bank Indonesia (BI) Governor Agus D.W. Martowardojo hopes that the government spending will become the primary stimulus to stimulate the national economic growth.

“The government spending includes those related to infrastructure projects and targeted non-energy subsidies,” Agus said at the BI Complex in Jakarta today, August 24.

According to Agus, the government will have to continue to improve the budget quality and absorption, as well as to optimize investments in infrastructure projects and non-energy subsidies.

Regarding the monetary, Agus said that the global economy remains uncertain since the global financial crisis in 2008. He added that many countries have not yet recovered from the crisis so that the global economic growth cannot move fast yet.

“Despite this situation, Indonesia’s economy remains stable, and the inflation rate remains low,” he said.

The central bank recorded a 5.01-percent economic growth in the first semester 2017. The condition motivated BI on Tuesday to lower the seven-day reverse repo rate by 25 basis points (bps) from 4.75 percent to 4.5 percent.

“A low and stable inflation rate has provided a room for a lower interest rate, which will cause a lower cost,” Agus said.

Bank Indonesia also reduce its deposit and loan interest rates to 3.75 percent and 5.25 percent, respectively. Agus hopes that the move will drive the national economy and boost the economic growth in the second semester of this year.

Source: https://en.tempo.co/read/news/2017/08/24/056902928/Bank-Indonesia-Expects-Govt-Spending-Boosts-Economic-Growth