JAKARTA, NNC - Minister of Finance Sri Mulyani Indrawati said in recent years Indonesia has experienced a current account deficit (imports are greater than exports), but that can all be compensated by the large amount of capital inflows to Indonesia. So that overall the transaction surplus still occurs.
However, in 2018, the deficit could not be compensated due to the flight of capital from Indonesia as a result of the normalization of the global economy, among others, with the interest rates hike policy of the US central bank. So that as a result there is a weakening in the rupiah exchange rate.
"The current account deficit is not a sin, especially for developing countries such as Indonesia. As long as the deficit is indeed used to import productive goods," Sri Mulyani said in Jakarta on Thursday (11/08/2018).
She revealed that Indonesia had GDP of more than USD1 trillion, with economic growth averaging 5.1 to 5.3 percent and stable inflation over the past 4 years in the range of 3 percent.
For this reason, the Government and the Central Bank are trying to spur growth while maintaining economic stability. Fiscal policy is used as a tool to achieve national development goals.
"The government is focused on investing in infrastructure and human resources. The private sector is also involved in development through Public-Private Partnership (PPP). As a result, poverty rates fall below 10 percent and the Gini Ratio also decreases," she explained.
With conditions of increasingly expensive financial financing and tightening of liquidity, the government will be more careful in determining priorities in development projects. This is all done to adjust to the development of the world economy which will lead to new normal conditions.