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BI urges focused structural reform to boost GDP growth

Focused structural reform and policy linkages are critical going forward, says top officials at the central bank.

Marchio Irfan Gorbiano (The Jakarta Post)
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Jakarta
Sat, March 30, 2019

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BI urges focused structural reform to boost GDP growth The picture shows Bank Indonesia building on Jl M.H. Thamrin in Central Jakarta. (Shutterstock.com/GeorginaCaptures)

I

ndonesia should continue with its structural reform agenda in the coming months to strengthen its economic fundamentals, as global uncertainty was expected to ease this year, a senior Bank Indonesia (BI) official has said.

One of the key issues that needed to be addressed was managing the current account deficit, which was blamed for the rupiah's steep fall last year.

A current account deficit means that a country is spending beyond its means in terms of foreign exchange liquidity, causing a reliance on external financing like foreign direct investments and portfolio investments. Portfolio investments are usually sensitive to global market sentiments.

Considering that Indonesia was a net oil importer, BI Deputy Governor Mirza Adityaswara said it needed to step up renewable energy outputs and reduce its dependency on fossil fuels as a priority of the structural reform agenda.

“As a country that continues to grow, we obviously need more energy. So, it’s about how to diversify our energy sources to be independent of imported fossil fuels,” Mirza said in Jakarta this week.

The oil and gas deficit has weighed heavily on Indonesia’s overall trade balance. The country recorded a deep trade deficit of US$8.57 billion last year, driven by a $12.4 billion deficit in the oil and gas industry, according to Statistics Indonesia (BPS).

In the first two months of 2019, the oil and gas industry posted a deficit of $886 million, exceeding the non-oil and gas trade surplus of $152 million in the same period.

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