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nternational Monetary Fund (IMF) managing director Christine Lagarde has praised the government'€™s policies in the realm of economics, saying the country is on the right track for economic reform.

She said that even though a further economic slowdown was still possible in the near future given the recent spike in global risk aversion and financial market volatility, Indonesia found itself on the right path to reform and prosperity.

'€œI was strongly impressed by the policy mix from both the monetary and the fiscal point of view,'€ she said Wednesday at a press conference.

The press conference wrapped up her two-day visit, during which she met with President Joko '€œJokowi'€ Widodo and spoke at a joint seminar with Bank Indonesia (BI).

'€œIf I had one little hint, I would say, keep up with the reforms, keep up with the infrastructure focus that you'€™ve had and use fully the fiscal space that has been made available as a result of phasing out subsidies in order to finance infrastructure,'€ she added.

Lagarde emphasized that the recent fuel subsidy cut had helped the government maintain a solid fiscal policy within the limits already set by the legislators.

The government began implementing a new energy policy earlier this year when it completely removed a subsidy for the widely used Premium gasoline and imposed a fixed subsidy for diesel and kerosene.

The fuel subsidy overhaul has created more than Rp 150 trillion (US$10.62 billion) in fiscal space that the government has allocated to for infrastructure, health and other programs.

Infrastructure-related spending received a budget allocation of around Rp 281 trillion in 2015, the highest level since 2005.

Moreover, the IMF applauded the monetary policies set by BI, especially in relation to the exchange rate.

The rupiah '€” just like other currencies in emerging economies '€” has been on a roller coaster ride as uncertainty lingers over the prospects of a US interest rate increase.

The ride has become even fiercer of late, following what the IMF calls '€œChina'€™s rebalancing'€ with its recent yuan devaluation and interest rate cut.

The rupiah has depreciated by 14.1 percent against the greenback since last year, ending at 14,137 per US dollar on Wednesday, as shown by data from Bloomberg.

However, despite the volatility, Lagarde said, '€œBI is doing a very steady, very solid, very predictable job at letting the currency fluctuate to absorb the shocks, which every emerging market and many economies around the world are facing.'€

The central bank itself has often said that it will continue to intervene in the market to smooth out fluctuations.

Foreign exchange (FX) reserves amounted to $107.6 billion by the end of July, falling from $108 billion a month before. '€œWith six to seven months of imports completely covered [by the reserves], I think that this is pretty good coverage as far as we can see,'€ Lagarde said.

Meanwhile, Finance Minister Bambang Brodjonegoro reaffirmed that the current administration would maintain its focus on infrastructure for years to come.

'€œIndonesia really needs infrastructure. When we cannot rely on exports or the flow of FDI [foreign direct investment], we need to find other kinds of growth. It should come from infrastructure development,'€ he said during the joint seminar.

To boost development, the government looks set to establish an Indonesian infrastructure financing agency (LPPI) in 2016. '€œIt will help with long-term financing for infrastructure and it will include the use of the PPP [public-private partnership] scheme,'€ he said.