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Regional governments told to stay alert amid global uncertainty
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Finance Minister Sri Mulyani Indrawati (Antara/Agung Rajasa)
W
ith external challenges likely to continue next year, Finance Minister Sri Mulyani Indrawati has told regional governments to focus on their fiscal policies to minimize the negative impacts of global economic uncertainty.
“Use all of our [fiscal] resources — the state budget and regional budgets — to create the resistance of our national economy from external shocks,” Sri Mulyani told hundreds of regional government officials during a seminar in Jakarta on Monday.
The risks include the ongoing trade tensions between the United States and China, as well as the US Federal Reserves’ policy normalization, she said.
She added that the state and regional budgets were fiscal tools that could influence or be influenced by the domestic economy, highlighting their role as a countercyclical buffer that could be utilized by the government to stabilize the economy.
The International Monetary Fund (IMF) recently revised its global growth projection from 3.9 percent for 2018 and 2019 to 3.7 percent over the same period, highlighting an uneven recovery among countries while some of the previously-identified risks have materialized.
Sri Mulyani added that the budgets should be designed to support more equitable development, create more job opportunities and reduce poverty so as to boost household spending and investment in the country — the two major sources of growth in the Indonesian economy.
The government has set aside Rp 826.8 trillion (US$ 56.95 billion) in the 2019 state budget to for regional administrations under various forms of budget allocations, such as the general allocation fund (DAU), special allocation fund (DAK), as well as village and subdistrict funds, the latter of which will be disbursed for the first time to regional administrations next year.
In addition, Sri Mulyani also called on regional administrations to focus on fostering a productive business climate to attract more investments, while also calling regions that depend on commodities such as coal and crude palm oil (CPO) to diversify their economy to create more sustainable growth. (bbn)
