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Wouldn't happen in US, EU: Former minister hails Indonesia’s answer to inflation
Charting a proactive path to recovery, a former finance minister, a prominent business representative and a high-ranking policymaker all agree that Indonesia must buttress domestic demand while keeping a lid on prices to emerge stronger from a worldwide crisis.
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Journalist Kania Sutisnawinata (left) moderates a panel discussion with (second left to right) Institute for International Monetary Affairs president Hiroshi Watanabe, former Indonesian finance minister Bambang Brodjonegoro, Finance Ministry advisor Masyita Crystallin and Sintesa Group CEO Shinta Kamdani at The Indonesia Summit 2023 hosted by MUFG Bank in Jakarta on Oct. 27. (Bank Danamon Indonesia/-)
F
ormer finance minister Bambang Brodjonegoro has praised government and monetary policy authorities for their active stance in supporting the domestic economy at a time of global turmoil, which he noted differed from how developed Western countries were responding to the crisis.
Europe and the United States were having a hard time dealing with the spike in demand after COVID-19 restrictions were lifted, but Indonesia had “a way to deal with potential high inflation,” he said on Thursday, speaking in a panel discussion at The Indonesia Summit 2023 held in Jakarta by MUFG Bank along with its subsidiaries Bank Damanon and Adira Finance.
He elaborated that Indonesia’s central bank was not left to fend for itself, noting, “The government has its own role [to play] when [it finds] that there is potential inflation coming from [commodities with] volatile prices or from administered [prices].”
Bambang, who served as finance minister from 2014 to 2016 during the first term of President Joko “Jokowi” Widodo, commended the government for its use of the state budget as a “shock absorber” to subsidize administered prices.
Anti-inflation tools
He added the government had instruments to address inflationary pressure from volatile food prices, namely the State Logistics Agency (Bulog) as well as the Trade Ministry’s direct market intervention.
“You cannot expect such an operasi pasar (market operation) to happen in the US […], because in the US and in the EU, it’s all [based] on market mechanisms. That’s why the only ammunition from the US and EU perspective is the central bank.”
