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Jakarta Post

BI welcomes govt’s move to tighten fiscal policy

Ayomi Amindoni (The Jakarta Post)
Jakarta
Fri, August 5, 2016

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BI welcomes govt’s move to tighten fiscal policy Bank Indonesia governor Agus Martowardojo speaks at the Executives' Meeting of Asia Pacific Central Banks (EMEAP) in Bali on Monday. (Courtesy of Bank Indonesia/-)

T

he central bank has welcomed the government's second budget cut, saying it reflects caution over current economic conditions and helps keep the state budget credible.

The government recently cut budgeted spending for this year by Rp 133 trillion.

Bank Indonesia (BI) governor Agus Martowardojo said the second budget cut was taken due to a more realistic expectation on tax revenues, with the revenue target lowered by Rp 219 trillion.

The global economy, he continued, faced uncertainties, as the UK decided to scrap its membership in the European Union. In addition, geopolitical turmoil, such as refugees crises and terrorist attacks, affected global economic growth.

"And this will also impact to Indonesia. If the President said the state budget needs to be revised, we welcome that. It shows that the government is cautious and wants to maintain the credibility of our state budget," Agus said in Jakarta on Thursday.

The government's tax amnesty program, he continued, would definitely attract Indonesian assets parked abroad and help the economy while the global economy was predicted to grow only 3 percent in 2016 and 3.1 percent in 2017.

However, Agus highlighted that market confidence in Indonesia was higher than in peer countries, indicated by recently rising capital inflows. (ags)

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