TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
ADB revises down Indonesia growth estimate following budget cut
Change Size
ADB economist Emma Allen (left to right), economist Priasto Aji, deputy country director for Indonesia Sona Shrestha, and economist Steven Tabor present at the press conference on the Asian Development Outlook 2016 in Jakarta on Sept. 27. (JP/Anton Hermansyah)
T
he Asian Development Bank (ADB) has revised down its estimate of Indonesia’s economic growth this year to 5 percent, from the previous projection of 5.2 percent, following the government's decision to slash its budget.
ADB economist Priasto Aji said a state revenue shortfall that was due to sluggish tax collection had forced the government to reduce public spending. While the government has promised to implement important infrastructure projects, some of them will probably be delayed.
"Private investment is also sluggish because the private sector’s reaction to the government's structural reform is slow," Priasto said during a press conference on the Asian Development Outlook 2016 at the ADB Jakarta office on Tuesday.
According to ADB deputy country director for Indonesia Sona Shrestha, the revenue shortfall was exacerbated by the slow performance of the tax amnesty. Those conditions would lead to very limited room for fiscal stimulus, while the monetary stimulus will have wider room for implementation amid low inflation.
"There is monetary policy space to stimulate growth. The reform of the investment climate can stimulate growth as well," she said, adding that both monetary stimulus and bureaucratic reform would take time to take effect.
Despite the fact that Bank Indonesia (BI) has cut the benchmark interest rate, it usually takes at least three months for bankers to transmit the policy to the economy, thus, according to the ADB, the growth revision was inevitable. (ags)
