Indonesia: Lowering deficit will ease pressure against rupiah: Sri Mulyani

• Aug 13, 2018

The government has said it would monitor fundamental indicators of the economy – as renewed pressures stemming from Turkey reverberated throughout emerging markets – while emphasizing its priority to narrow the current-account deficit (CAD).

Finance Minister Sri Mulyani Indrawati said the government would monitor the implementation of the state budget and balance sheets of state-owned enterprises.

She added that Bank Indonesia (BI) was expected to ensure a low and stable level of inflation, while the Financial Services Authority (OJK) would continue monitoring the banking industry.

“We will continue to be alert and to conduct exercises [policy options] on whether the global conditions could trigger far higher dynamics,” she said in Jakarta on Monday.

Second-quarter economic growth, which stood at 5.27 percent and was boosted by domestic spending, represented good news for the country, despite the widening of the current-account deficit to US$ 8 billion, equal to 3 percent of the gross domestic product (GDP), she added.

The rupiah traded at Rp 14,608 against the US dollar in the Bloomberg Dollar Spot Index as of 4.48 p.m. on Monday, depreciating by 0.9 percent.

Sri Mulyani added that the government would push forward with a policy plan to cut imports and boost exports in a bid to narrow the current-account deficit, including by enforcing the local content requirement (TKDN) policy and expanding the use of a 20 percent blended biodiesel ( B20 ) mix.

“Using B20 is important to cut our imports of oil because it is a great component of imports,” she added.

She also called on state-owned electricity company PLN to reduce imports of raw materials.

 “PLN is among the companies that use a lot of capital goods.  Reducing imports is one of the short-term ways [of improving CAD],” she added. (bbn)

Source: http://www.thejakartapost.com/news/2018/08/13/lowering-deficit-will-ease-pressure-against-rupiah-sri-mulyani.html