Indonesia's economy is forecast to expand by 5% next year and the government will allocate fiscal stimulus to achieve its growth target, Finance Minister Sri Mulyani Indrawati said Thursday, Dow Jones reported. "This growth target is optimistic considering projected slower growth in the international economy, but it is achievable," Indrawati told members of House of Representatives’ budget committee.
The 2010 budget is expected to contribute Rp91.9 trillion ($9.19 billion) to the country’s monetary balance to accelerate the economy's growth while preventing "excessive" inflation, Indrawati said. She added that the 2010 budget would focus on boosting demand, with the government allocating Rp518.4 trillion for spending and Rp144.5 trillion for investment.
The 2010 budget bill is expected to be endorsed next month before new House members are inaugurated. The government this year plans Rp73.3 trillion in stimulus spending, largely in the form of tax breaks for businesses. She said infrastructure development, investment, exports and tourism among other sectors will drive growth next year. Bank Indonesia forecasts the economy to grow 3.5% to 4.5% this year, compared to 6.1% in 2008.
Meanwhile, State Minister for National Development Planning Paskah Suzetta said on Thursday that the government lacked the funds to finance infrastructure projects across the country, The Jakarta Post reported. Suzetta said the government had only allocated Rp40 trillion ($3.96 billion) for infrastructure projects next year, or 30% of the costs of all projects. From 2010 to 2014, the government will need Rp1,429 trillion to improve infrastructure, he said. “This amount of investment is needed to help our economy grow between 5% and 7%,” Suzetta said.
Source: The Coordinating Ministry for Economic Affairs, Trade and Investment News, 24 Aug. 09