Stimulus crucial but often comes late

Aditya Suharmoko ,  The Jakarta Post ,  Nusa Dua, Bali   |  Tue, 05/05/2009 11:36 AM  |  Business

Fiscal stimulus is crucial to boost economies during a crisis, but it often comes late as it is surrounded by political issues, World Bank economist William Wallace said late Monday.

"The problem with fiscal stimulus is it is getting to the point when the economy is recovering anyway. But the conventional wisdom is, it will be robust," he said in a seminar on the impact of stimulus during a crisis.

He said to be able to launch a fiscal stimulus package, the government usually engaged in long discussions with parliament, while the economy itself was regaining ground.

Wallace added that Indonesia had been "very lucky" in this crisis. "The tax law revision that cut tax rates last year makes it a kind of stimulus. The government had also taken bold decisions to raise fuel prices (enabling them to cut fuel prices amid this crisis)."
 

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