Indonesia : Economic and Social Update, October 2005
This October 2005 edition of the Indonesia economic and social update reports that the government moved to address ballooning fuel subsidies and exchange rate instability with a bold policy package. The report emphasizes the importance of a good ma...
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| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/379651468043504060/Indonesia-economic-and-social-update http://hdl.handle.net/10986/36674 |
| Summary: | This October 2005 edition of the
Indonesia economic and social update reports that the
government moved to address ballooning fuel subsidies and
exchange rate instability with a bold policy package. The
report emphasizes the importance of a good macroeconomic
policy, investment climate reforms, and effective
expenditure management in Indonesia, comprising a continued
focus on reducing the government debt burden (as measured by
a trend decline in debt to GDP), and depoliticizing domestic
fuel prices by linking them to international prices and
monetary policy designed to bring inflation in line with
regional averages. It also urged that a clear articulation
and coordination of policy announcements be a priority.
Improvements to the investment climate would be led by
reversing the slide in oil and gas exploration and
production, concrete measures to address investor concerns
including the time and expense to register a company and
redressing cumbersome tax administration procedures. A quick
clearance of an investment bill that dramatically reduced
red tape would send out a strong, highly visible signal to
investors. However, the report notes that Indonesia's
key challenge may lie in the allocation and management of
public expenditures. The government's reduction of
untargeted fuel subsidies and their reallocation to capital
and social spending represent an unprecedented opportunity
to improve the level and quality of growth in the medium
term. The government will need to build on budget reforms to
improve the link between government priorities (accelerating
infrastructure and reducing poverty, for example), improving
the efficiency of budget procedures, and reducing leakages. |
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